The Trash Blog

The Disposal Cost of Packaging

“Making a salad has historically required buying a head of lettuce, carrots, etc. These ingredients, however, must be prepared for serving before the salad can be eaten. Since we typically don’t eat the entire vegetable, this process produces waste. (Remember, cleaning also consumes water.)

If instead, we buy bags of ready-to-eat salad, only the edible parts are included. The rest is used for animal feed, keeping it out of the trash bin and providing additional economic value. Transporting only the edible ingredients also produces more efficient results per unit of transportation, helping reduce both fuel consumption and the related carbon dioxide production.”

The above is from a brochure called “The Hidden Value of Packaging” published by the American Institute for Packaging and the Environment (AMERIPEN), which is an industry association for packaging producers and users.

In its many publications, AMERIPEN demonstrates that packaging is highly valuable to the US economy, citing its ability to protect products so that they can be transported to a broader range of markets; its ability to avoid spoilage by protecting food products from bacteria and rot; and its ability to educate consumers through information provided on labels. There can be no disputing that the economic viability of many businesses would be severely reduced without the advantages of containers and packaging.

Ameripen LogoAccording to the 2007 US Economic Census, state and local governments spent $23,879,562,000.00 on solid waste management in 2011. The US EPA says that containers and packaging make up 30% of the MSW stream, this means it cost taxpayers $7,163,868,600.00 to collect and dispose of the packaging that accompanied their products.

Without disputing any of the benefits of packaging that AMERIPEN claims, I question why taxpayers should have to foot the 7-billion-dollar-bill of its disposal. Indeed, as AMERIPEN has so thoroughly demonstrated in their brochures, packaging provides a huge benefit to manufacturers and marketers, allowing them to deliver products further, more safely, and with more information.

When we spoke with Professor Munger about recycling green glass, he encouraged us to remember property rights when the concept of packaging comes up. Professor Munger pointed out that often times we act like packaging is nobody’s property (or everybody’s), despite the fact that packaging is originally intended to meet the manufacturer’s need, facilitating the sale and delivery of their products.

In the same way that we expect businesses to contribute to the cost of those things that facilitate the operation of their business (roads, water, energy, and most other civil services) it seems natural that we should expect them to contribute to the cost of the disposal of the packaging that allows them to market, deliver, and keep safe the goods consumers purchase.

Professor Munger believes this can best be achieved through the concept of Extended Producer Responsibility (EPR). EPR is a system of requiring manufacturers to account for the full cost of their products (including disposal) so that these costs can be rolled into the price charged consumers, rather than letting businesses unfairly externalize costs on tax bills.

PSI LogoUnsurprisingly, AMERIPEN states that they have not selected EPR as a “strategic issue,” nor have they even made up their mind whether or not they support it. An organization called the Product Stewardship Institute claims that AMERIPEN holds an actively hostile stance towards EPR.

AMERIPEN’s stance on EPR is indicative of the treatment the concept receives throughout US society. With the exception of electronics and some very hazardous products, there few instances where EPR has been initiated.

Spider Man

This entry was written by Philip and published on March 12, 2014 at 12:12 pm. It’s filed under EPR, Packaging, Plastic and tagged , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

4 thoughts on “The Disposal Cost of Packaging

  1. Uncle Chris on said:

    In general, it would seem that taxpayers do not foot the bill for the disposal of pacakaging nearly so much as those who pay fees for garbage collection do.

    Is this a distinction worth noting? Perhaps.

    Fees are collected to fund specific uses. Taxes are often used in a more general way.

    It’s the unrestricted nature of most tax fund outlays that subsidizes problems in our society. Tax funds underwrite the moral hazards of our social welfare programs and provide the quick solution to problems with which legislators and executors in government must deal. “Quick Solution” is often the way to “Poor Solution”

    For example, large city Planning Departments are often supported entirely by fees. This means that such cities no longer need budget general funds to support these departments. It also means that fees to get construction permits are unsubsidized and therefore much higher than they would be if all taxpayers helped fund such departments.

    Bulders, remodlers, and other users of such planning departments pass these increased costs to their clients. This, finally, implies that those who use, or benefit from, such governmental services pay for them, while those who do not are not forced to support such services. However, high fees may imply that more seek to save costs by not getting permits where and when they should.

    The same logic would seem to apply to fees one might collect for water, sewer, and waste. The more such fees cover the actual costs of use, the more fair the imposed burden. One may find more people drilling their own wells, or dumping in their backyards as a result. However, the associated policies would restrict legislators from seeking quick, dirty, polluting solutions.

    Just think what would happen if we imposed fees upon those who received welfare benefits!

  2. Philip on said:

    Waste collection and disposal fees are frequently rolled into water and sewer bills or even property taxes. There are many cases where cities operate their own municipal collections fully funded by tax dollars. Even in cases where residents take their garbage directly to the landfill and pay the tipping fee, I argue (as do many economists) that the cost of disposal is underwritten by taxes.

    The ultimate cost does lie with taxpayers because the vast majority of waste in the US finds disposal through landfilling or incineration: technologies which rely on the use of public resources (land, groundwater, and air).

    Most landfill operators are responsible for the landfill for at most 30 years. If there is a contamination problem after their responsibility is up, its usually taxpayers who foot the bill (e.g. the vast number of Superfund sites that are landfills). Incinerators decrease air quality and produce ash that ends up in landfills. Disposal costs often end up in tax bills.

    There is no doubt that a pay-as-you-throw system would be a step towards a more accurate connection between what users pay and the real costs of waste collection and disposal.

    But it seems to me that placing the cost of collection and disposal in the budgets of producers (Extended Producer Responsibility) would be the most effective way of ensuring that the fees levied for waste disposal match the costs.

  3. Uncle Chris on said:

    Economists frequently claim that cost allocation can change behavior. Many have heard the expression “the more something is taxed, the less of it there is”. The Laffer Curve is another expression of this. Similarly, subsiizing an activity often extends or increases it.

    Thus, if taxpayers are underwriting costs of disposal methods which harm the environment and government seeks to legislate such behavior out of existence, then two choices present themselves. Either government can reallocate costs to those who cause the harmful activity or it can regulate the behavior in a manner that reduces or eliminates it.

    Your next story shows how this latter method works; however, as has been noted, there are many cases in which such legislation is counterproductive. What I have observed at times here is that the methodology for quantifying the costs associated with various forms of disposal seems to be missing from the study of trash. Such an understanding would be crucial for reallocating costs to polluters.

  4. Pingback: Simply Orange Says Do Not Reuse | The Trash Blog

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