Topic Area: Deposit-Refund Systems

Geographic Area: Maine--United States

Focal Question: How effective has the deposit-refund system been at reducing waste and increasing recycling in Maine? How has this legislation affected waste-management costs?

Sources:

(1) Anderson, R. 2001. Chapter 5: deposit-refund systems: EE-0216B-06. The United States Experience with Economic Incentives for Protecting the Environment. 1-14.

(2) Beverage container deposits on non-carbonated beverages. The National Soft Drink Association. 17 March 2002. http://www.nsda.org/Issues/noncarb.html.

(3) Bottle bills at a glance—Maine. The Bottle Bill Resource Guide. 22 Feb. 2002.

http://www.bottlebill.org/USA/states-maine.htm.

(4) Economic impacts—jobs and businesses. The Bottle Bill Resource Guide. 16 March 2002.

http://www.bottlebill.org/Economic/jobs/htm.

(5) Economic impacts—sales and prices. The Bottle Bill Resource Guide. 16 March 2002.

http://www.bottlebill.org/Economic/sales.htm.

(6) Environmental impacts—litter. The Bottle Bill Resource Guide. 17 March 2002.

http://www.bittlebill.org/Environmental/Litter/litter.htm.

(7) Environmental impacts—solid waste. The Bottle Bill Resource Guide. 17 March 2002.

http://www.bottlebill.org/Environmental/solid.htm.

(8) What is a bottle bill? The Bottle Bill Resource Guide. 22 Feb. 2002.

http://www/bottlebill.org/what_are_b-bills.htm.

Reviewer: Sarah Piampiano, Colby College ’02

Review:

Solid waste consolidation and litter reduction have been at the forefront of many state and national environmental agendas in recent years. Many states have implemented various programs including by the bag pricing on trash and recycling initiatives. Ten states, including Maine, have implemented a deposit-refund system on bottles, cans, batteries, and tires. While some of these programs are voluntary, others, such as in Maine, are mandated by the legislature.

On January 1, 1978, after repeated attempts at passage had failed, the Maine bottle bill passed and became a law for beer and soft drink containers (Anderson 2001). Distributors (or manufacturers) placed a 5 ¢ deposit fee and a 3 ¢ handling fee on all retailers who, in turn, passed these costs off on consumers through increased product prices. The consumers, upon returning the used cans and bottles to designated redemption centers and various retail stores, received their 5-¢ deposit back as a refund (Anderson 2001).

In 1990, the bottle bill was expanded to include liquor and wine (September 1) and then bottled water, iced tea, and juice (December 31) (Bottle Bills at a Glance—Maine March 2002). This expansion resulted in a number of problems. Juice, for example, is generally distributed by a number of different manufacturers and distributors all within the same geographical area. Consequently, when collecting the containers from retailers, problems arise in differentiating which bottles each distributor is obligated to collect. As a result, some distributors pay out more in refunds, while others pay out less. To avoid these problems, manufacturers have had to contract out to independent collectors as well as charge deposits to retailers in order to assure equity (Anderson 2001).

Another problem involves the public buying containers out of state, and then returning them in-state to collect the refunds. Many bottles and cans are nationally marked, thereby giving the incentive for misredemption. In other words, all bottle and cans have a 5 ¢ designation on them, even in states where they may not be collected for redemption. Anderson (2001) notes that Coca-Cola, for example, had redemption rates in excess of 100% for many of their products. In 1993, 1994 and 1995 Minute Maid Juices and Hi-C had reported rates of 142%, 281% and 126%, respectively.

Third, many retailers have also been dissatisfied with the expanded bill. The expansion requires more storage space, diverts more labor to redemption, and adds to the number of pests due to drink residue left in the bottles (Anderson 2001).

In its initial stages, the deposit-refund system showed immediate successes in litter reduction. In 1980, one year after the bill was passed the Maine Department of Conservation released a report showing a 69-77 percent reduction in beverage container litter. This reduction also correlated to a 34-64 percent reduction in overall litter (Environmental Impacts—Litter March 2002). The Maine Department of Transportation estimated that, as a result of the new legislation, some parks had reduced beverage container litter by as much as 90% (Anderson 2001). Not only are people littering less, but where litter does exist, others are willing retrieve the disposed bottles and cans for extra refund. Thus the system promotes both reduced littering and increased cleanup. Surveys of non-deposit states have shown that the primary source of litter is beverage containers. An estimated 36-69 percent of all litter is predicted to be attributable to bottles and cans (Environmental impacts—litter March 2002).

Despite the relatively large effect of the deposit program on litter and waste reduction in Maine, the economic impacts have not been not as outstanding. In a 1991 survey conducted by George Criner, beverage prices were compared over Maine, Massachusetts, Rhode Island, and New Hampshire. His results showed higher prices in Maine than any other state. Yet in Massachusetts, another state using the deposit-refund system with a bottle bill law in place, prices were comparable to those of its surrounding states. That is, the prices in Massachusetts were the same as other non-bottle bill states. Intuition suggests that in Massachusetts distributors face more competition, thereby driving prices down, and the ‘rural nature’ of Maine increases handling and distribution fees which are then born by the consumer (Anderson 2001, Bottle Bills at a Glance—Maine March 2002).

Impacts on beverage sales are unclear. Since 1978 Maine when the legal drinking age was adjusted from 18-20, the net effect of the bill on beer sales cannot be determined. The effect on soft drink sales is also ambiguous as, for some bottlers, sales increased, whereas for others, sales decreased (Economic impacts—sales and prices March 2002). Such ambiguity suggests extraneous influences, other than the effectiveness of the bill, potentially affecting bottler sales.

Impacts on employment have been negligible. Approximately 180 redemption centers were opened as a result of the initial bottle bill, resulting in the creation of an estimated 214 to 626 jobs (Economic impacts—jobs and businesses March 2002). The overall employment impact has therefore been small.

Prior to the bottle bill, curbside recycling had been the predominant means of recycling containers. The implementation of the bill, however, completely changed the structure and nature of this curbside program. Several key features of this transition are important. First, the expansion of the bill resulted in the expansion of curbside programs. 1.2 million people live in Maine, of which 70% live in towns with fewer than 10,000 people. In 1991, there were 18 curbside programs servicing 14% of the population. However, by 1994, four years after the expansion of the bill, the number of curbside programs had increased to 64. 33% of the population had access to recycling services (Environment—solid waste March 2002). The introduction of an expanded bottle bill, which covered the majority of all containers, has risen the public awareness of pollution and litter control, correlating to the increased demand for local recycling programs.

Collection costs have increased from 2.5¢ and 4.2 ¢ for beer/soda and juices, respectively, to 5.7¢ and 7.5¢. Disposal costs for other types of waste were increasing as well. Prior to the deposit system, 2,538 tons of curbside waste was recycled at a cost of $41 per ton. After the original bill was passed, curbside tons recycled decreased to 1, 917 and the cost per ton increased to $80. After the expanded bill, recycled tons decreased to 1, 378, at a cost of $100 per ton. Under the deposit system, after the original bill, 1,138 deposit tons were recycled at a cost of $567 per ton. After the expanded bill, 2,037 deposit tons were collected and recycled at a cost of $402 per ton. There is an obvious disparity between curbside and deposit costs. The increase in curbside costs can be attributed to two things. First, the increase in collection costs affected the costs of this program. Second, with the introduction of the bill there was the possibility of a diversion from the curbside program to the deposit system, thereby reducing economies of scale and increasing costs per unit.

The deposit-refund system from the outside appears to be an effective system. And indeed, it is when assessing litter reduction. With the implementation of the original and expanded bill, container litter has dropped dramatically, also significantly and positively affecting overall litter and solid waste levels. However, the program has also increased collection costs and maintenance costs for retailers and distributors, as well as necessitated an increase in storage space and substitution of labor, which have decreased economies of scale.