It's Not Easy Being Green: Lessons from Disposable Carryout Bag Regulations

Author(s): Taylor, Rebecca Lynne | Advisor(s): Villas-Boas, Sofia B. | Abstract: What and how we eat impact our environment, and our environment impacts how and what we eat. With public concern over reducing pollution and health care costs, policymakers often turn to economic interventions to change how consumers consume (e.g., taxes, bans, and advisory campaigns). In this dissertation, I explore the effectiveness of such policies, especially when there is debate over optimal policy design. I also examine how these interventions displace consumption in unintended ways—where the reduction of one externality causes the growth of another. Finally, I consider how these policies interact with issues of equity. Environmental and health issues often disproportionately affect poorer populations, and yet sometimes the policies designed to address environmental and health issues have unattractive distributional consequences.In this dissertation, I focus on and dissect one increasingly popular policy intervention which aims to address an environmental externality by incentivizing consumers to change how they obtain food—the regulation of disposable carryout bags (DCB). The contentious debate over these policies and their design, as well as the spatial and temporal variation in their adoption across the U.S., make them a particularly rich setting to study. The three essays of my dissertation examine DCB regulations in three distinct ways: (1) are they effective tools for changing behavior, (2) do they impose non-monetary costs on consumers, and (3) do they cause unintended consequences that undermine the benefits of the policies. The first chapter in my dissertation, "Bans vs. Fees: Disposable Carryout Bag Policies and Bag Usage," examines the importance of policy design. Having lived in both Washington, DC—which implemented a plastic and paper bag fee in 2010—and in Berkeley, CA—which implemented a plastic bag ban and paper bag fee in 2013—I wanted to know whether bag bans or bag fees were more effective in changing behavior. Bag bans are command-and-control approaches to regulate behavior directly while bag fees are market-based approaches to incentivize individuals to change their own behavior. While there is growing adoption of both types of policies in the U.S., little had been done to compare outcomes under each regulation tool. To fill this gap, I designed a field experiment taking advantage a local DCB policy change in the San Francisco Bay Area. With help from a team of undergraduate researchers, I made bi-weekly visits to a set of treated and control stores during the months before and after the DCB policy change. We observed customers during checkout and recorded the number and types of bags used, whether a bagger was present, and basic customer demographic information. With these data, we use a difference-in-differences model to measure how bag bans affect customers' demand for various types of disposable and reusable bags. We then investigate how bans and fees compare by juxtaposing our analysis with a concurrent study on bag fees in the DC Metropolitan Area. We find that both policies lead to remarkably similar increases in reusable bag usage and decreases in total disposable bag usage. However, under a plastic bag ban, the eradication of plastic carryout bags is offset by a 47 percentage point increase in the use of paper carryout bags. Therefore, if the environmental costs of both plastic and paper bags are a concern to policymakers and the public, our results indicate that the policy tool matters. The second chapter, "Waiting in Line: The Hidden Time Costs of Changing Behavior," asks whether DCB policies impose non-monetary costs on consumers. Understanding the non-monetary costs consumers face has implications for social welfare evaluation and policy design; however, quantifying these costs is not always feasible. In this chapter, I am able to precisely identify and measure a hidden time cost of DCB policies. Using high-frequency scanner data from a national supermarket chain and an event study design, I quantify the effect of DCB policies on the wait and processing time of checkout services provided by supermarkets. My results show that DCB policies cause a persistent 3% increase in transaction duration. Moreover, given the capacity constrained queuing system of supermarket checkout, the 3% slowdown of individual customers compounds into an even larger congestion externality—with DCB policies leading to an average additional minute of wait and processing time per customer. The policy implications of my results are threefold. First, policies which incentivize consumers to change their habits may have large non-monetary costs, and ignoring these costs overstates the welfare gains of such policies. Second, not fully considering the institutional constraints of a policy setting can result in competing externalities. I show that when consumer behavior is connected through queuing systems, individually slower actions propagate into an even larger congestion externality. Third, the policy tool (i.e., bag bans vs. bag fees) matters with respect to the time costs. I find that policies which tax both plastic and paper bags have less persistent time costs than policies which ban plastic and tax paper, due to paper bags being a slower technology.The third chapter, "Bag Leakage: The Effect of Disposable Carryout Bag Regulations on Unregulated Bags," examines whether DCB policies have unintended consequences that undermine the benefits of the policies. In particular, do DCB policies lead to increased consumption of other types of plastic bags? In California, DCB policies prohibit retail food stores from providing customers with thin plastic carryout bags at checkout and require stores to charge a minimum fee for paper carryout bags. However, all remaining types of disposable bags are unregulated (e.g., garbage bags, food storage bags, paper lunch sacks). Using quasi-random variation in local government DCB policy adoption in California from 2008-2015, I employ an event study design to quantify the effect of bag regulations on the consumption of plastic and paper carryout bags, as well as the consumption of other disposable bags sold. This article brings together two data sources: (i) weekly retail scanner data with product-level price and quantity information from 201 food stores in California, and (ii) observational data collected at checkout in seven Californian supermarkets. The main results show that a 40 million pound reduction of plastic from the elimination of plastic carryout bags is offset by an additional 16 million pounds of plastic from increased purchases of garbage bags (i.e., sales of small, medium, and tall garbage bags increase by 67%, 50%, and 5%, respectively). This plastic bag "leakage" is an unintended consequence of DCB policies that offsets the benefit of reduced plastic carryout bag use. Additionally, DCB policies lead to a 69 million pound increase in paper carryout bags used annually. Altogether, I show that DCB policies are shifting consumers towards fewer but heavier bags. This chapter concludes by discussing the environmental implications of policy-induced changes in the composition of plastic and paper bags, with respect to carbon footprint, landfilling, and marine pollution.