The Case for a $1 Bottle Deposit Law

Funds from Harrisburg for municipal recycling programs have been declining in recent years, so it’s important for greens to start thinking about ways PA could increase recycling rates with less spending.

My favorite idea is a bottle deposit law. In a handful of states, they charge you 5-10 cents for your soda or beer bottle as a deposit. To get the deposit back, you drop the bottle off at a recycling center.

The idea is to encourage people to avoid throwing their bottles in the landfill. If people throw the bottle away, they lose the money. If they recycle it, they get the money back.

This is not a tax. Nobody’s violating the Grover Norquist pledge passing a law like this. If you turn your bottle in to a recycling center, they have to give you the 10 cent deposit back. In theory, Grover Norquist can save all his bottles, turn them in to the recycling center, and avoid feeding the Beast any new tax revenue.

In practice, the 10 cent deposit is too small to be of much interest to most beer and soda drinkers, so most people don’t bother to hoard their bottles for recycling. The people paying the deposit are mostly not the people who are collecting the deposit. The people who actually collect the deposits are low-income folks who go through other people’s trash, collecting large tranches of bottles from their neighbors and area businesses to turn in for a cash reward.

Now, because of the low deposit fee this is not a very productive use of time for most workers, even very low-skill workers. If there’s a 10-cent deposit for each bottle, you need to collect 500 bottles just to get 50 bucks. That’s a lot of work for very little payoff.

Contrast that with India, where Hannah Green says collecting recyclables and selling them to recycling firms is a relatively good paying job compared to other opportunities for low skill workers:

Katherine Boo’s recent book related to the subject, Behind the Beautiful Forevers, went deeper, exploring the mechanisms of entrepreneurship and exploitation in India. However, there is also a more positive side to this story that often goes uncommented on. An efficient recycling system has a long-term positive effect on society as a whole, and is also something that North America and Europe generally lack. That is a significant part of what the trash economy in India is- an informal recycling system.

Estimates suggest that between 56 and 70 percent of Indian recyclable material actually gets recycled, compared to 30 percent in Europe and the United States. This is because in India, the informal trash economy is highly efficient, and generates a surplus, whereas in rich countries dealings with trash can be seen as a market failure. While Indian government dealings with trash are highly inefficient, a significant portion of the informal workforce-about 90,000 people in Delhi alone — are eager to get their hands on the growing supply of trash so that they can sell it to recycling firms for profit.

The informal trash economy subsidizes the less efficient formal sector, thus benefiting taxpayers as well as the environment. While many of these workers live in very poor conditions, most of them still earn more than the minimum wage, some significantly so.

To make participation in America’s informal recycling sector more lucrative, states should consider making their bottle deposits considerably higher. Instead of 5 or 10 cents, what if states slapped a $1 deposit on every glass or plastic bottle?

Turning in 1000 bottles would fetch you $1000. At the margins you’d see more soda drinkers hoarding their bottles and turning them in, since it would be more worthwhile to expend the effort to get the money back.

But more importantly, the higher payoff would make wages in the informal bottle collection sector competitive with other low-wage jobs. A few different progressive goals would be well-served by this.

For one thing, we’d have higher recycling rates. Creating a decent profit opportunity for people to collect recyclables would result in fewer recyclables ending up in the landfill.

It’s also a progressive transfer of money from people who spend a lot of money on soda and beer to people at the bottom of the income scale.

By adding to the price of soda and beer, the bottle deposit would function in much the same way as the Pigouvian taxes some people want to levy on those products.

One could also imagine a high enough deposit reward putting upward pressure on wages in other low skill service jobs. In a world where people can earn $500 a week collecting 500 plastic bottles, low-wage service businesses are under some pressure to raise their wages to compete with wages in the informal recycling market.

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