Is a National Bottle Bill Worthwhile?

Lawmakers must decide if recycling used beverage containers is worth the time and effort. 

Does recycling bottles pay or does it cost industry and the public more than it’s worth? This is a key question for lawmakers and regulators who must balance the interests of the recycling industry and the beverage and packaging industries.

Somewhere down the road there is going to be a proposal for a national beverage container deposit law -- popularly known as a bottle bill. While it is quite unlikely there will be any serious action -- beyond a hearing or two -- on such a measure from the 104th Congress, the U.S. Environmental Protection Agency continues to gather data in preparation for the day a bottle bill gets its hearing. To that end, the agency is finally releasing full-text versions of a 1994 study prepared for the EPA by the Tellus Institute, first made public only in short, summary form last fall.

Now, EPA is calling for comment on the study, entitled "Preliminary Analysis: The Costs and Benefits of Bottle Bills." The study is based largely on data generated by the beverage industry -- traditional opponents to bottle bills -- and summarizes the costs and benefits of bottle bills. EPA is quick to draw a line between itself and the study, and did not publish -- and likely will not publish -- the study in the Federal Register.

"EPA is not endorsing the report," EPA’s Claire Lindsey declares. "But we are requesting comment on the report by May 1."

COSTS VS. BENEFITS

The bottom line of the report seems to be that costs exceed benefits gained from traditional bottle bills. The exception is the California system. But there are enough assumptions and presumptions made in the Tellus study to upset or delight almost everyone on all sides of the issue.

Based on the latest available data, from the mid-1980’s, with only minor adjustments, the Tellus study estimated that the cost of the traditional redemption system to the private sector -- retailers and bottlers combined -- is 2.9 cents per redeemed container, or $12.06 per capita per year. A plausible alternative estimate, assuming efficiency gains over the last decade, is 1.9 cents per redeemed container, or $7.90 per capita, the study says. "We believe that published studies have often erred in assuming unrealistically high wages for retail workers," according to the report.

Streamlined sorting and record keeping requirements in California reduce the costs of redemption in that state’s unique deposit system. Adjusted for comparability with traditional systems, the California system boasts a net benefit of one-half cent per redeemed container, or $2.08 per capita.

Any losses to municipal waste management systems as a result of traditional bottle bills can be eliminated by allowing local recycling programs to claim the refunds for deposit containers they recycle, as is done in California. This adds an estimated $1.10 per capita to the cost of the redemption system. "It is the most effective of the alternatives we analyzed for ensuring that recycling programs are not hurt by bottle bills," the study’s authors say.

It’s tough to get a handle on litter reduction, but it appears to be substantial in bottle bill states. "Our best guess is that the benefits are worth $2.78 per capita," the study says.

Elevated recycling rates due to bottle bills reduce many types of air and water pollution, including greenhouse gas emissions. One possible method of evaluation of these benefits -- the system developed in the Tellus Institute Packaging Study -- suggests that the reduction in emissions would be worth $1.60 per capita annually. Most of the benefit is due to reduced power plant emissions resulting from the increase in aluminum recycling. Greenhouse gas reductions from bottle bills could amount to 1.74 million metric tons of carbon nationwide, again largely due to the increase in aluminum recycling.

CONTAINER RETURN

The Tellus report describes the flow of empty containers and dollars in Massachusetts and California. Massachusetts is typical of the arrangements in the nine states which have traditional bottle bills, while California’s unique system provides an important alternative approach. The cost differences between these systems are substantial. Tellus estimates an annual net cost to industry and government of either $12.06 or $7.90 per capita under the traditional approach, versus a net benefit of $2.08 under the California approach, adjusted for comparability with other systems.

The key to these differences is in the method of handling empty containers after consumers have redeemed them. In most bottle bill states, containers must be returned to the bottlers or distributors, imposing substantial sorting, handling, and accounting requirements. In California, on the other hand, the state rather than the individual bottlers is responsible for the deposits and for handling empties. Empty containers never need to return to the companies that sold them, but can be efficiently recycled soon after they enter the redemption system. It is similar to the difference between census-taking in biblical times, when everyone returned to their native village to be counted, and census-taking today, with everyone counted wherever they now live.

Tellus found that most studies on costs rely on a detailed study by the Food Marketing Institute performed in 1986. That study estimated labor time and non-labor cost requirements per container for several sizes of stores, types of containers, and sorting configurations. Labor time for a medium-sized store varied from 3.1 seconds for aluminum cans with the most efficient sorting system, to 6.9 seconds for glass bottles with the least efficient sorting system. Non-labor costs amounted to 1.6 cents per container at 1993 prices.

As a result of maarket changes since 1986, Tellus assumed that 3.1 seconds has become the average labor time per container. The $8 average wage for retail food store labor reported by the Bureau of Labor Statistics for 1993 produces a labor cost of 0.7 cents, or a total retail cost estimate of 2.3 cents per redeemed container. Much of this is offset by handling fees paid by bottlers or distributors in many bottle bill states.

The median published estimate of net costs to bottlers and distributors -- excluding handling fees paid to retailers -- is 0.6 cents per container in 1993 prices, Tellus found. So, the total industry cost, including both retail and bottler/distributor costs, is 2.9 cents per container. Applied to an estimated 416 returned containers per person per year, this yields the initial $12.06 per capita estimate. Tellus assumed only a modest gain in retail labor efficiency; retail labor now accounts for only one-quarter of the initial cost estimate. In view of the many changes in technique and technology over the past ten years, it seems plausible that efficiency has increased more significantly. Assuming a one-third reduction in costs, they obtained an alternative, high-efficiency cost estimate of 1.9 cents per container, or $7.90 per capita.

For the California system, Tellus began with the California Futures study of costs under AB-2020, the state legislation that enacted the redemption system, and changed several features for comparability with traditional redemption systems. They used California cost levels but removed processing fee and related plastics industry payments, and assumed a 5-cent deposit and other features of the traditional system. Their conclusion is that the California redemption system would show a net benefit of 0.5 cents per redeemed container, or $2.08 per capita. This is a net benefit, meaning that unclaimed deposits -- assumed to be retained by the state -- plus scrap values of containers exceed the administrative and handling costs.

FINANCIAL BENEFIT

Perhaps the most widely debated aspect of bottle bills is the impact on local recycling efforts. After testing several options for reducing the cost impact on recycling programs, Tellus found the most effective option is the one used in California, where recycling programs can collect the deposits on containers they receive without separate sorting and redemption. Under this option, recycling programs enjoy a financial benefit from the bottle bill, while redemption system costs would increase by $1.10 per capita above the figures presented above.

The principal cost to consumers is the cost of unclaimed deposits. Assuming that 15 percent of deposits are not claimed, this is an estimated $3.65 per capita. Other costs such as the inconvenience of redemption do not appear to be substantial, as experience in bottle bill states shows that households quickly learn to redeem containers as an occasional part of regularly scheduled shopping trips.

Tellus also set values for two categories of benefits: reduction in litter and reduction in manufacturing emissions. In both cases the valuations, and the analysis underlying them, are clearly controversial.

In non-bottle bill states, the public bears the costs of greater amounts of litter. Tellus took into account reductions in litter collection costs, accidents such as injuries due to broken glass and farm damage including injuries to animals. There is a wide range of estimates for each of these effects, but Tellus gave substantially greater weight to the low end of the range.

In addition, the public will benefit from reduced air and water emissions in manufacturing, due to the higher level of recycling achieved by bottle bills. According to the study, avoided manufacturing emission benefits reflect the benefits of replacing virgin feedstocks with recycled materials, particularly aluminum, in production.

WHY THE CONTROVERSY?

Bottle bills were adopted by 10 states in the 1970s and 1980s. Oregon passed the first bottle bill in 1972. Eight other states followed suit by 1983. California’s redemption system, the newest in the nation, was enacted in 1987. Although the details vary from state to state, all 10 states require that consumers pay deposits on each beer or soda container they purchase; some states extend the system to a few other beverages. The deposit is refunded when the empty container is returned.

Why the fuss about a few types of beverage containers? Tellus found three parts to the answer. First, beer and soda containers are a visible, clearly recyclable part of the solid waste stream. Second, they are among the types of waste that most often end up as litter. Third, the problem of beer and soda container disposal is a comparatively new one in historical terms, arising only in the decade or so before the first bottle bills were enacted.

There are literally billions and billions of containers. The Container Recycling Institute, a nonprofit environmental organization that serves as a clearinghouse for bottle bill-related information, estimates that 122 billion beer and soda containers were produced in 1991. The average American used 489 beer and soft drink containers that year, or more than one per day. More than three quarters of these containers, 366 per capita, are aluminum cans: on average, each of us buys an aluminum can every day, even in leap years. Most of the remainder, 81 per capita, are glass bottles. A mere 29 plastic bottles and 134 steel cans round out the nation’s annual average beverage shopping lists. Use of steel cans, already small, is declining rapidly and was not considered.

According to 1994 EPA waste generation estimates, beer and soft drink containers comprise 3.7 percent of the municipal solid waste stream or 7.7 million tons.

NUTS AND BOLTS

What makes California's system unique among the states with bottle bills? To summarize a few differences, California places a deposit on all beer/malt, soda and carbonated mineral water containers; the deposit is 2.5 cents for containers equal to or less than 16 ounces, and five cents for larger containers. Massachusetts -- representative of the nine states with traditional botttle bills -- places a five cent deposit on all beer/malt, soda, and carbonated water containers.

The mechanics of container deposit legislation can be divided into two separate areas — the flow of bottles and the flow of money. Massachusetts’ handling of both bottles and money is more complicated than California’s. The complications stem from Massachusetts’ requirement of sorting and accounting for containers by brand, which is avoided in California.

In California, collection and reprocessing of bottles is more integrated and efficient than in Massachusetts, according to Tellus, due to the elimination of most sorting requirements. In California, the state originates and handles the deposits, and retailers pay deposits directly to the state; in Massachusetts, on the other hand, the bottlers originate the deposit.

In California, high-volume retailers are required to ensure that containers can be redeemed nearby; in Massachusetts, all retailers are required to provide on-premise redemption of any container brand that they sell.

In California, curbside recycling programs and other recyclers receive the redemption value for the deposit materials they collect, without separating them from non-redemption containers, based on periodic sampling. In Massachusetts, MRFs or curbside collection programs must separate and present deposit materials for redemption in order to receive the deposits.

EFFECT ON RECYCLING

Existing bottle bills have a noticeable effect on national recycling markets. If bottle bills were extended to additional states, what would be the effects on markets and prices?

According to Tellus, PET and aluminum processors and markets could accommodate the increased supply; glass processors would be likely to receive more usable material than they have the capacity to handle, so increased supply from bottle bills would be likely to depress markets.

In sum, Tellus concludes that if container deposit legislation were introduced nationwide, the supply of recyclables would increase significantly, but whether this material could be efficiently processed is under debate.