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Bottle Bill in Oregon and Hawaii:Cost/Benefit Analysis

Team One Brett Baumgartner

Lauren ButzZack DeMar

Katherine HansonPhil Lewis

Brian LuevanoPenelope Scott

Dan Sullivan

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ProblemThe US consumes 1500

plastic water bottles every second

The plastics used degrade very slowly

Cause of the “Great Pacific Garbage Patch”

Plastic can be remolded and formed into new bottles

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Bottle Bill BackgroundHow It Works How It StartedThe consumer pays a

deposit when purchasing the bottle and gets it back when they recycle it

Empty bottles were littering the streets

Failed attempt in Virginia

First successful bill was passed in Oregon

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Oregon: Bottle Bill Established in 1971

known as the “Bottle Bill”

Created friction between large bottle producers

Reduced production costs

Competed with local bottlers

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Oregon: Bottle BillBenefits Costs

Energy conservationA ton of plastic bottles

saves approx. 3.8 barrels of oil

Recycled materials uses 2/3 less energy than raw materials

Reduction in costs In 1971 Marion County

spent $20,000 on litter removal

Estimated $100,000

Inflation1971 5¢= 28¢ in 200118 pack=$5.04 rather

than 90¢

Breakage and contamination“down cycling”

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Oregon

Improvements Needed:Lack of increases in redeemable deposits

Deposits have not taken inflation into effect Decreasing incentive to return/recycle bottles

Less willing for individuals to participate possible decreases in the effects of the bill

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Hawaii: Bottle Bill

Solid Waste Management; Deposit Beverage Container Law (Act 176)

Only state without curbside recycling

Goal: Increase recycling and reduce littering

Implemented on January, 1st 2005 5 cents redeemable deposit Container fee is 1 cent per

container Redemption rate exceeds 70% in a

year the fee is raised .5 cents (1.5 cents per container)

Consumer receives 3.5 to 4 cents for that container.

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Hawaii: Costs and BenefitsCosts

Not efficient due to lack of oversight

Potential Fraud due to over-reliance on self-reporting from distributors and redemption centers

Benefits+4.7 billion beverage

containers recycledGives an incentive to

recycleReduces litterHawaii reached a 79%

recycling rate (2009)

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Hawaii

Improvements NeededNot enough state supervision

Loss of moneyOperation issues Lack of awareness

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Cost Benefit Analysis

YearCost savings in nominal

termsFuture cost savings in real

dollarsPresent value

1 $100,000 $97,561 $89,097

2 $100,000 $95,181 $79,382

3 $100,000 $92,860 $70,727

4 $100,000 $90,595 $63,016

5 $100,000 $88,385 $56,145

In 5 years, a total cost savings of $358,366.75

Inflation rate = 2.5%Discount rate = 9.5%

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Cost-Benefit Analysis: AEM ModelOverall environmental quality (benefit) defined: • Reduction of litter caused by

irresponsible bottle disposal• Expressed on x-axis• Scale of 1 to 10, 10 being

highest environmental quality

Cost to consumer • Bottle Bill shifts marginal

cost curve from MC to MC_New, effectively lowering the cost to consumer and raising environmental quality

• Example: Instead of bottle exchange, Hawaii decides to implement curb-side recycling because it’s cheaper and more efficient. Also, this would eliminate the problem of fraudulent reporting by businesses.

1 2 3 4 5 6 7 8 9 10$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

D=MBMCMC_New

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The Future of the Bottle Bill

11 current bottle bills Beverage production industryRetail industry

Deposit law progress

Arizona’s bottle billsTitle: “beverage containers; recycling fund;

redemption”

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ConclusionBottle Bills are great ways to reduce waste

Proper incentives to increase recyclingVulnerable to market inefficiencies

What can you do to encourage recycling laws and their efficacy?

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Questions??