Should NJ Implement a Beverage Container Redemption Law?

Recently, a New Jersey General Assembly committee voted in favor of the”Smart Container Act,” which has been hotly debated in the state for decades. This Act would impose a $0.10 deposit on juice, soda, sports drinks, water, beer, and wine containers 24 oz and smaller and a $0.20 deposit on larger ones. This fee is imposed at time of purchase, and returned to the customer when the empty bottle is properly returned. Using a fee-based system incentivizes the proper handling and disposal of beverage containers.

A law like this is nothing new. In fact, 10 states – California (1986), Connecticut (1978), Hawaii (2002), Iowa (1978), Maine (1976), Massachusetts (1981), Michigan (1976), New York (1982), Oregon (1971), and Vermont (1972)- and one territory, Guam (2010), all have bottle bills.

Benefits and Pitfalls of Container Redemption Laws

Governments may pass container deposit legislation for a number of reasons: mainly, (1) to encourage recycling, (2) to reduce beverage container litter along highways and in lakes and rivers, and (3) to fund environmental programs. Supporters of the bill in NJ, say that it will help to promote recycling, decrease litter, and raise approximately $30 million a year to clean up lead.

The Impact of Bottle Bills on Recycling Rates

Recycling rates increase with bottle deposit stations because it encourages people to properly dispose of the their bottles. Depending on the deposit amount, bottle recycling rates in states with bottle bills range anywhere from 75% (for $0.05 deposits) to 95% (for $0.10+ deposits). The U.S. average recycling rate is somewhere around 35%. New Jersey can expect high recycling rates if they sign a bill that imposes $0.10 and $0.20 deposits on beverages.

Bottle bills also tend to produce high-quality recyclable materials due to limited contamination and breakage (as one would find with a standard curbside recycling system).

Proponents of the bottle bill see curbside and bottle redemption programs as having a symbiotic relationship. Container redemption centers collect only beverage bottles, while curbside programs collect non-beverage glass, plastic, and metal containers.

Opposers of the proposed NJ bill (e.g., the Association of New Jersey Recyclers), however, say that the bill will negatively impact all of the current curbside recycling programs across New Jersey. For states considering bottle bills, creating a dual system (curbside and container deposit) is by far the largest critique. Curbside recycling programs could lose revenue because they also depend on collecting bottle containers (especially aluminum cans) for their income.

Litter reduction appears to be the largest benefit of redemption programs. Providing a nominal deposit on bottle returns provides poor individuals and non-profit civic organizations with an economic incentive to clean up the litter. If you live in or have visited a state with a bottle bill, chances are you’ve seen someone going around collecting bottles for redemption. In these states, there is a visible lack of bottle litter as compared to other states. Maryland’s report indicates that bottle redemption centers are the most effective way to decrease litter, even more so than Adopt-a-Highway and other litter control programs that focus on all litter (not just bottle litter).

The Cost of Bottle Bills

Recycling typically gets a bad rap for being an expensive method of waste disposal. And deposit systems cost more than curbside systems because deposit systems require separate infrastructure for a limited amount of recyclables. Curbside programs operate at roughly $125 per ton of material recovered, while redemption centers operate at roughly $500 per ton, most of which comes from handling costs.

In the 10 states with deposit programs, the average handling cost is $0.033 per container. States have taken steps to reduce the handling cost: covering the costs with unclaimed deposit revenue or placing a non-refundable fee on each beverage sold. Regardless of the method used, any potential impact on sales of beverages impacted by the container deposit program is minimal because there is inelastic demand (i.e. consumers will buy the products no matter what).

Beverage containers account for a very small portion of the waste stream (roughly 5%), so many critics of the bottle bill and proponents of curbside collection argue that beverage container redemption centers are not worth the added cost. Most curbside collection systems are “single stream”, which means that you can recycle all recyclable material in one container.

But no-deposit, no-return beverage containers are a corporate subsidy; taxpayers absorb the cost of disposing these beverage containers. Under deposit systems, producers and consumers pay for the cost of recycling, not government and taxpayers. Using a dual system, taxpayers pay less for disposal, less for litter pickup, and less for curbside recycling.

Because recycling rates don’t reach 100%, there is left over monies from unredeemed containers. If monies received from unredeemed containers is not used to fund the redemption program itself, the money may be used to fund environmental programs as well. In the newest legislative session, the NJ Assembly decided that unredeemed deposit money would be put towards initiatives that limit lead exposure in schools and homes. This is the number one goal for the proposed NJ Bottle Bill.

State of Current Redemption Programs

In general, the current bottle redemption programs in the 10 states have been successful at achieving their stated goals (especially in litter reduction). See Maryland’s 2011 report for an example. However, some of these states are showing signs of bottle bill fatigue.

In Oregon, for example, redemption rates for containers with deposits were down to 68% in 2014 (nearly three points down from 2013). Oregon’s response is to increase the $0.05-deposit to a $0.10-deposit in 2017 to encourage higher redemption rates. In Massachusetts, the statewide redemption rate was only 59% in 2015, down from nearly 68% in 2011. Because of this, Massachusetts is taking a different approach and considering eliminating their container redemption system all together and replace it with a curbside collection program. (MA would eliminate the $0.05 deposit on soda and beer containers and substitute a 3-year, $0.01 per container fee paid by beverage distributors and wholesalers to fund the curbside programs.)

MA’s plan is similar to Delaware, “which in 2010 scrapped its refundable nickel deposit system and replaced it with a temporary 4-cent tax on beverage containers that was used to fund enhanced recycling”.

California’s bottle bill is also facing a monetary loss due to an outdated compensation methods. In 2015, CA’s certified beverage container centers lost $20 million due to reduced processing payments from the state. CalRecycle has increased processing payments to help mitigate this problem. The Container Recycling Institute (CRI) has also released a report discussing the failure of the current funding system and necessary reforms. CRI’s main suggestion is to correlate payments based on real-time price tracking, rather than based on averages from the previous year (i.e. the current system).

Conclusions?

As with most programs, beverage container deposit bills come with costs and benefits. Perhaps container deposit laws are truly outdated, as there seem to be better methods to recycle. States without current bottle bills, such as New Jersey, should instead focus on legislation that will significantly increase recycling efforts across the state and provide better access to curbside pickup, drop-off facilities, and recycling facilities. Perhaps if New Jersey’s main reason to implement a bottle bill were to decrease litter, rather than fund lead reduction efforts, a container redemption law would be the way to go. But it appears NJ would be better off utilizing a different method to tackle the lead – and container recycling- problems.

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