What the macroeconomists are saying about deposits

In an article of 7 March 2020 in the Financieele Dagblad, the well-known Dutch macroeconomist Mathijs Bouman (FD, Nieuwsuur) points to the 'power of small amounts'. As soon as plastic bags were no longer free, their use plummeted. This shows the power of small amounts and the impact it has on our behaviour. Therefore, Bouman believes that the government should introduce a deposit on bottles and cans, because there too, a small financial incentive will lead to the return of empty beverage packaging.

Mathijs Bouman is impressed by the results of the ban on free plastic carrier bags, which the Minister for the Environment and Housing Stientje van Veldhoven sent to the House of Representatives on 2 March: "the measure has proven to be absurdly effective. The minuscule price has enormously adjusted our behaviour. In 2015, we still used nearly three billion plastic bags. (....) In the years after the ban on free bags, use has fallen spectacularly, to 600 million units on an annual basis. In 2018, the average Dutch person used a bag for no less than ten days. Per person, we used thirty-five that year. That is a decrease of 80%. Even the biggest plastic hater would not have dared to dream of this success."

Bouman continues: "You might expect that a lesson would be drawn from this for the broader policy to reduce the single use of plastic. If you can achieve so much with just a few cents, shouldn't that leave you wanting more? (...) If the packaging industry were really serious, they would themselves advocate for the most effective method to combat litter: a small deposit on every bottle (and can). But they are precisely dead set against that."

Bouman concludes: "As if research is still needed. The power of small amounts has already proven itself many times over. Go and pick up litter from the roadside yourself for an hour. Bet you won't come across a single plastic litre bottle with a ten-cent deposit?"

Bouman's opinion piece aligns with publications by colleagues in the field. In "More environmental benefit possible from recycling", the economists of the Dutch Bureau for Economic Policy Analysis (CPB) already wrote in November 2019: "Deposits provide an incentive to combat litter. Plastic litter has negative environmental consequences because it persists for a long time. In addition, deposits provide a more usable raw material for 'high-quality' recycling than other forms of collection."

The Belgian macroeconomist Geert Noels, author of the book Econoshock, is also convinced: "Deposits are logical itself, let us make that small effort for a better environment," he wrote: "deposit systems work, Norway proves it", referring to a BBC report on the Norwegian deposit return scheme.

The Financial Times noted in an opinion piece on plastics in the oceans that the recycling rate is much higher in countries with deposit return schemes: "Policymakers can also do more to change public behaviour. Recycling rates are much higher in countries that make it mandatory to run deposit return schemes."

And The Economist, in an analysis of recycling systems in Europe in its edition of 11 January 2020, is highly praiseworthy of the new deposit system in Lithuania: "The country now recycles at a record level. Almost three-quarters (74%) of plastic packaging waste was recycled there in 2017, the highest proportion in Europe. The EU average was 42%, and the worst performers, including Finland and France, under 30%. Much of Lithuania’s success is due to a deposit refund scheme, introduced in 2016. (....) By the end of 2017, 92% of all bottles and cans sold in Lithuania were being returned, close to triple the amount before the scheme began. The overall plastic packaging recycling rate increased by almost 20%."

The power of small amounts is established for these authors. It has been empirically proven with plastic bags and also in countries with deposit return schemes. Both the incentive to combat litter and the strong recycling results of deposit systems are recognised. In other words, for macroeconomists, it is clear that deposit systems work. They therefore advocate for their wider implementation.