Economic Aspects Of Extended Producer Responsibility by Organisation for Economic Co-Operation and Development

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By Organisation for Economic Co-Operation and Development

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Walls’ paper examines different instruments and combinations of instruments to reduce waste disposal as the environmental objective, and to minimize cost as the economic objective. Considered technologies are recycling and the use of less material intensive products. The tradition in environmental economics is to consider the Pigovian tax as the first best instrument par excellence. This recommendation is, however, inappropriate in the case of waste reduction. Ms. Walls emphasizes two obstacles.

Depending on the policy, some burden goes to producer or market (internalised to market perfectly) or some burden goes to the earth (externalised further to the earth). If the latter case occurs, additional instrument should be taken. This is the case of failure to internalise downstream externalities. x for producers to internalise the environmental impacts that products have at one end of a product’s life. If we consider the product life cycle stages (from production and consumption to end of life or disposal), and divide those activities into two stages, that is, at the stage from production to consumption as economic 55 activities (upstream activities) and the other stage as treatment and disposal activities (downstream activities); then internalising the environmental impacts products have at the end of a product’s life means internalising the environmental impacts product-disposal-activities have, into economic activities, or, internalising downstream externalities into upstream activities.

Clearly, advanced recycling of the plastics used in electronics, for example, is still in a fairly infant stage of development. Figuring out the optimal designs to address a multitude of safety, performance, quality, durability, and recycling concerns with those plastics is an exceedingly difficult job. 43 It is clear that any feasible and cost-effective policy that addresses DfE for electronics will have to count on market signals working, at least to some extent. So while poorly functioning recycling markets might present an argument for an EPR policy to spur DfE, as we explained above, this does not imply that government should try to devise policy that replaces markets.

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