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An economic analysis of the Packaging waste Recovery Note System in the UK

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  • Matsueda, Norimichi
  • Nagase, Yoko

Abstract

In order to cope with the increasing scarcity of final dump sites for household wastes, the UK recently introduced an environmental policy targeted at the firms that produce and sell products that generate packaging wastes. This policy requires such businesses to hold predetermined numbers of tradable credits called “Packaging waste Recovery Notes” (PRNs). This article provides insights into the economic implications of such a policy through a simple analytical model of a recyclable product and the PRN markets. Our analysis yields two particularly interesting results. First, an increase in the required recycling rate dampens the output and landfill waste levels, while the effect on the level of recycling activities is ambiguous. Second, an increase in the landfill tax always leads to an increase in the landfill waste. We also discuss how the socially optimal landfill tax in the presence of the PRN market should be chosen.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 4 ()
Pages: 669-679

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Handle: RePEc:eee:resene:v:34:y:2012:i:4:p:669-679

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Web page: http://www.elsevier.com/locate/inca/505569

Related research

Keywords: PRNs; Recycling; Landfill tax; Comparative statics;

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References

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  1. Fullerton, Don & Wu, Wenbo, 1998. "Policies for Green Design," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 131-148, September.
  2. Markus Lehmann, 2004. "Voluntary Environmental Agreements and Competition Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 28(4), pages 435-449, August.
  3. Don Fullerton & Thomas C. Kinnaman, 1993. "Garbage, Recycling, and Illicit Burning or Dumping," NBER Working Papers 4374, National Bureau of Economic Research, Inc.
  4. Calcott, Paul & Walls, Margaret, 2005. "Waste, recycling, and "Design for Environment": Roles for markets and policy instruments," Resource and Energy Economics, Elsevier, vol. 27(4), pages 287-305, November.
  5. Ino, Hiroaki, 2011. "Optimal environmental policy for waste disposal and recycling when firms are not compliant," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 290-308, September.
  6. Pierre Fleckinger & Matthieu Glachant, 2010. "The organization of extended producer responsibility in waste policy with product differentiation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00446819, HAL.
  7. Margaret Walls & Paul Calcott, 2000. "Can Downstream Waste Disposal Policies Encourage Upstream "Design for Environment"?," American Economic Review, American Economic Association, vol. 90(2), pages 233-237, May.
  8. repec:hal:journl:hal-00446819 is not listed on IDEAS
  9. Fleckinger, Pierre & Glachant, Matthieu, 2010. "The organization of extended producer responsibility in waste policy with product differentiation," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 57-66, January.
  10. Walls, Margaret, 2006. "Extended Producer Responsibility and Product Design: Economic Theory and Selected Case Studies," Discussion Papers dp-06-08, Resources For the Future.
  11. Palmer, Karen & Walls, Margaret, 2000. "Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies," Discussion Papers dp-97-51-rev, Resources For the Future.
  12. Michael Barrow, 2003. "An Economic Analysis of the UK Landfill Permits Scheme," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 361-381, September.
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Cited by:
  1. Mansikkasalo, Anna & Lundmark, Robert & Söderholm, Patrik, 2014. "Market behavior and policy in the recycled paper industry: A critical survey of price elasticity research," Forest Policy and Economics, Elsevier, vol. 38(C), pages 17-29.
  2. Göran Finnveden & Tomas Ekvall & Yevgeniya Arushanyan & Mattias Bisaillon & Greger Henriksson & Ulrika Gunnarsson Östling & Maria Ljunggren Söderman & Jenny Sahlin & Åsa Stenmarck & Johan Sundberg, 2013. "Policy Instruments towards a Sustainable Waste Management," Sustainability, MDPI, Open Access Journal, vol. 5(3), pages 841-881, February.

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