When Recycling is Tough to Oppose

Eleven states have enacted container deposit legislation–or laws that pay consumers to return plastic bottles and aluminium cans. While support derives mostly from environmental groups, it's interesting to hear indifference or occasional hostility from market-oriented sources.

The libertarian critique of recycling is, by and large, a consistent one insofar as implementation goes: taxpayers shouldn't pay to manipulate market allocations in raw materials. That's undesirable, ceteris paribus, because it creates inefficiency. Furthermore, the operational segregation of recycling from ordinary waste management artificially inflates service costs. Given, not all libertarians are squarely opposed: many consider the long-term consequences of resource depletion as a negative externality requiring a fix. But even most of them oppose implementation: it's a problem that just doesn't justify the cost.

But the beauty of container deposit legislation is it isn't implementation. At least, it's not the sort of implementation that garners widespread disapproval. The key feature of container-deposit legislation is what it taxes: not your pocketbook, but your capacity to manage time. Take Iowa, for example: there's a 5-cent price hike on all applicable containers. That's not a traditional sales tax though, because it's completely forgiven if you decide to sort your trash and return the bottles! The only inescapable liability here is a second worth of effort.

So, the government does everything hands-off here. But consider what it gains:

a) an aggregate collection of recyclables (which makes them cost competitive by eliminating the price pressure associated with collection efforts)
b) cutting service costs by crowdsourcing labour and vehicles
c) inroads against the resource-depletion externality (consumption is shifted away from pre-consumer sources by lowering the price of post-consumption substitutes)
d) reduction of a second externality: litter! (our individual failures to internalise ugly streets and undervalued real estate because we never feel it sting one-Coke-can at-a-time)

The net-negative CBA on recycling looks entirely different with container-deposit. The primary cost (transfer payments manipulating market preferences) evaporates almost entirely: the leg-up given to recyclables is itself a voluntary microeconomic decision. And the corresponding gain, correcting an externality, is even supplemented by correcting another!