Flemish study: comprehensive deposit return system makes money

A large deposit system for beverage packaging can be completely financed by the proceeds from the collected materials and the unclaimed deposits. A comprehensive study commissioned by the Government of Flanders indicates that deposit systems for beverage packaging can be profitable (and therefore not ‘prohibitively expensive’ as the Dutch House of Representatives was led to believe in 2012).

The Flemish study calculated both the costs and revenues in four of the five variants at around 3.5 cents per package. With only automated collection (the fifth variant), costs are halved and a profit of 2 cents per package is generated. On top of this, there is a substantial benefit for society due to lower clean-up costs.

Until now, Belgium has only had a deposit on beer bottles, but is considering a broader introduction of deposits. In the Flemish coalition agreement last year, it was agreed that the potential impacts of introducing a deposit on one-way beverage packaging would be investigated. Research agency Technum has now conducted the exploratory study.

The costs for collection and transport, the revenues from unclaimed deposits, and the reduction in litter appear to be the most important. The total net costs of the investigated deposit systems are low: three of the five scenarios are even profitable. The current – more expensive – Dutch system is characterised as relatively inefficient.

Deposit systems cost-neutral or profitable

Commissioned by the Flemish government, the study did not yet focus on determining the ideal deposit system, but on gaining insight into the expected impacts and the bandwidth around them. Therefore, a variation in the number of beverage packagings and the organisation of return was examined in five deposit scenarios. The deposit system included all beverage packaging or only beverage packaging of less than 0.75 litres. And it took back all packaging materials or exclusively PET plastic and cans. In all scenarios, a deposit of 25 euro cents was assumed, and in four of the five scenarios, 15% manual collection was assumed.

The gross costs for the five deposit scenarios were calculated at an amount between 36 and 95 million euros, depending on the scale of the deposit system. This mainly concerns costs at collection locations (65 to 70%) and for transport (15 to 20%).

The costs for the four scenarios with 15% manual collection appear – per package – to differ very little: the costs (excluding revenues) are calculated at an amount between 3.3 and 3.6 cents per package. In the fifth scenario, the gross system costs were calculated at only 1.7 cents per package; here, collection takes place exclusively via reverse vending machines (in stores larger than 400 m2). This concerns all PET bottles and cans, but not, for example, beverage cartons and glass wine bottles.

Offsetting the gross costs for the deposit system are substantial revenues from unclaimed deposits and material revenues. In all scenarios, an amount of 3.3 to 3.7 cents per package was calculated for this.

Various sensitivity analyses show that both costs and revenues depend on assumptions that require further investigation, with the necessity of manual collection at small retail locations, the collection rate, and the level of the deposit fee being particularly relevant.

Dutch deposit system “relatively inefficient”

In all scenarios, the Flemish study calculates with at least twice as many reverse vending machines per inhabitant than currently exist in the Netherlands. It is therefore highly remarkable that this study shows that such a deposit system pays for itself or is even profitable. When the possible abolition of deposits was discussed in the House of Representatives in 2012, State Secretary Atsma still characterised the deposit system as ‘prohibitively expensive’.

The Dutch House of Representatives is now very interested in the results of the Flemish study; in December last year, a motion was passed by a large majority requesting the new State Secretary for the Environment to contact the Flemish government regarding this and to keep Parliament informed.

One comment from the Flemish study is therefore extra interesting (page 29): “In developing a deposit system in Flanders, it seems appropriate to model the collection after the German (and Scandinavian) model instead of the relatively inefficient Dutch system”.

The Flemish deposit impact analysis can be found on the website of the VVSG (the Flemish Association of Cities and Municipalities): http://www.vvsg.be/Documents/P007475-51-052-01%20Definitief%20eindrapport%20impactanalyse%20SGS%20eenmalige%20drankverpakkingen.pdf