Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

Reframing the Concept of Collection Systems
with Economic Incentives- Based on the Review of Deposit-Refund Systems and Point Systems -October 2010

English Summary

Tomohiro TASAKI1), Daisuke NUMATA2), Tsunako MATSUMOTO3), Naoko TOJO4)

1) National Institute for Environmental Studies (NIES)
2) Fukushima University
3) Community Policy Institute4) International Institute for Industrial Environmental Economics (IIIEE), Lund University-1-

Reframing the Concept of Collection Systems with Economic Incentives

SummaryThis research sought to revisit and analyze measures which aim to promotecollection of recyclables and waste with the provision of economic incentives. As existing
examples of such measures, we examined various aspects of deposit-refund systems andreward points collection systems from both theoretical and practical viewpoints
In Chapter 1, we stated the background and aims of this study and categorized
various types of collection systems with economic incentives (see Table 1). The
characteristics of deposit-refund systems and reward points collection systems, the focusof this research, were highlighted.

Table 1. Types of collection systems with economic incentives based on characteristics of
incentives
Flow of economic
incentives (e.g. money,
points)Incentive
providerOne-way↓
Returner
Returner↓
Incentive
provider↓Returner

Example of systems*Texts in the parentheses show

Outline of the systemtransfer of economic incentives

Subsidy for citizen groupcollection(Local government → Citizen
group)

An incentive provider gives an
economic reward to thereturner of an object.

An incentive provider collect a
deposit from a person who
Deposit-refund systems
obtains an object that should be(Consumer → Retailer →collected, and pay back theConsumer）
deposit to him/her when theobject is returned.
An incentive provider giveTwo-way
Incentive
points or other forms ofproviderReward points collection
economic rewards to a person↓
systems
who returns an object that
Returnershould be collected. The(Retailer → Consumer →↓returner can use the points for
Retailer)
Incentive
buying products and services
providersold by the point provider.
* Collection systems without economic incentives includes, among others: station collection;
curbside collection; pick-up collection at each household; collection of bulky waste which often
requires prior notification and payment by the generator; collection using a parcel delivery(which is applied for collection of waste person computer under Act for Promotion of Effective
Utilization of Resources in Japan), collection at designated collection sites including shops;
collection organized at specific events; and citizen group collection. In some cases, collection atdesignated collection sites and collection organized at events involves provision of economic
incentives, and citizen group collection often receives subsidies from local governments inJapan.

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Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

In Chapter 2, we summarized the potential advantages, barriers as well as
improvement measures for deposit-refund systems found in existing research on
deposit-refund systems in the field of economics. Existing literature suggested that
deposit-refund systems had several advantages such as its effectiveness in increasingcollection of items covered by the system and smaller need to secure additional financial
resources (see Table 2). Meanwhile, the literature also pointed to various challenges
related to their implementation (see Table 3). These challenges indicated that
deposit-refund systems required careful design consideration on a number of issues, suchas items covered by a deposit-refund system, the size of deposit and refund, identifiabilityof the items, flows of materials and money, handling of unredeemed deposits, taxation on
deposits, accounting system, handling fee for retailers, cost of managing a deposit-refund
system, and the like.

Table 2. Potential advantages of deposit-refund systems(1) Maximizing social welfare(2) Effective monitoring system(3) Environmental benefits(a) Increase in collection rate(b) Promotion of recycling and reuse, contribution to resource
efficiency(c) Reduction of waste, landfill, and illegal dumping(4) Others(a) Additional source of income especially for people with low
incomes(b) Less budget required for collection(c) Use of unredeemed deposits for replacing uncollected
products(d) Raising environmental awareness(e) Increase in the total number of employment-3-

Reframing the Concept of Collection Systems with Economic Incentives

Table 3. Potential Barriers of introducing and implementing deposit-refund systems(1) Burden on retailers for collection, storage and treatment of collected
objects(2) Burden for establishing a mechanism for collection of deposit andprovision of refund(3) Disputes over the use of unredeemed deposit(4) Decrease in sales of the products covered by deposit refund systems(5) Negative influence on existing collection systems(6) Concerns over claiming refund without paying deposit and/or a shift ofsales of products in areas not covered by a deposit-refund system(7) Implementation issues (e.g. who does what, financial mechanisms, andmonitoring and penalty against non-compliance and fraud)(8) Others(a) Hindrance of reuse by household members(b) Sanitary issues(c) Loss of employment in manufacturing of products affected bydeposit-refund systems(d) Inducement of environmentally-inappropriate consumption when
the scope of product items is inappropriate(e) Additional energy use
Chapter 3 started with a summary of our investigation on existing deposit-refund
systems outside Japan, including the sources of information for the respective systems.
Our investigation indicated that a variety of items had been covered by what wasconsidered as a deposit-refund system (see Table 4). While many of the targeted items
were beverage containers, other items such as batteries, containers for hazardous
substances, cars, tires, waste oils, electrical and electronic equipment, lamps andfluorescent lights had been also covered by deposit refund systems. Application of the tax
reimbursement system was identified in the case of CFCs (chlorofluorocarbons). Basedon the overview, we subsequently selected and looked into the implementation practice ofthe following five systems in greater details: deposit-refund systems for beveragecontainers in Sweden and Germany, for fluorescent lights and lamps in Austria, forpesticides in the State of Maine in the United States, and a tax reimbursement system
for trichloroethylene and CFCs in Norway. The review of the five systems helped us
identify a number of measures to ease the introduction of the systems as well as theirimplementation. Aims of these measures included limitation of items covered in thesystem, reduction of handling procedures, strengthening of source separation, collection
and appropriate treatment and disposal, reduction of industries’ opposition, andenhancement of the comprehensibility of the system (see Table 5).

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No. 205, 2010

Table 4 Objects of mandatory deposit-refund systems outside Japan

Object ofdeposit-refund
systems
Drink containers
Batteries
Cars
Tires
Toxic chemical
containers
CFCs
Oil waste
Chemicals
PackagingElectronics
Glass
Plastics
Paper
MetalsLamps andfluorescent lights
OthersNo. of mandatory systems
Number of systems whose
Number of systems
existence were confirmed
referred to in(Figures in parenthesis
literature but whoseshows no. of systems thatexistence cannot bewere abolished)confirmed
43 (2)
23
13 (2)
8
3 (1)
3
3 (1)
3
2 (1)
4
0
1
0
0
2
0
1
1
1
1

(0)
(1)
(0)
(0)
(2)
(0)
(1)
(1)
(1)
(1)

5
3
4
4
1
3
1
1
1
0

0 (0)

2

Table 5 Improvement measures to cope with the barriers in Table 3.
(Limit items covered in the system)- Non-provision of refund when the number of returned items exceeds acertain level (Austria)- Exemption of large containers (Germany)(Reduce handling procedure)- Omit the procedures of deposit and refund when returning the object
with the purchase of the same object (Austria)- Use of reverse vending machines (Sweden and Germany)- Minimum quantity required for return (Norway)(Strengthen collection)- Returners do not have to pay disposal cost for the return of up to three
items (Austria)(Increase consumers’ convenience)- Enabling consumers to return products to any retailer that sells thesame type of products (Sweden and Germany)(Increase distinguishability of items)- Use of bar codes (Sweden and Germany)(Strengthen source separation)- Attachment of a written pledge (US-Maine)(Reduce opposition of private actors & enhance appropriate treatment)- Payment of handling fee to retailers, etc. (Sweden and Norway)- Half of deposit is used for disposal of collected objects (Norway)(Enhance comprehensibility of the system)- Making the scope of items easy to understand (Germany)- Uniformed size of deposit (Germany)-5-Reframing the Concept of Collection Systems with Economic Incentives

In Chapter 4, based on the review in the previous chapters, we sought to reframe
the concepts of deposit-refund systems, the core subject of this report. First, we provided
a categorization of deposit-refund systems based on the objects of the systems – anapproach unique to this report. Deposit-refund systems were divided into five categories:
deposit-refund system for waste; for valuables; for items useful for their providers(reusables); for items whose providers wished to collect them once the items became
unuseful for their users; and for items containing hazardous substances (toxics). The
main features of the respective categories identified were as follows (also, see Table 6).
・ A deposit-refund system for waste would be introduced primarily to prevent littering.
It is important to secure the disposal cost of collected waste.
・ A deposit-refund system for valuables is considered to have a higher applicability
when the price of valuables is not high and whose littering is of concern; in cases
where the prices of valuables are sufficiently high, voluntary collection via purchasewould prevail (i.e. collection is taken care of under normal market mechanism). If an
actor seeks to continue to collect the valuables under the deposit-refund system, it istherefore important to be aware of the potential for the changes in the price of
valuables.
・ Under the deposit-refund systems for reusables and for items whose providers wish
to collect, collection of these items is of the interest of their providers. These systems
are thus often voluntarily organized. However, in cases where externalities exist,
social welfare will not be maximized without a government intervention. Even whena government does not intervene, it should formulate minimum rules for business
entities regarding deposit-refund systems from the viewpoints of consumer protection
as well as of fair handling of deposits and tax payment. Appropriate reporting andauditing of the accounts of deposits should be promoted.
・ A deposit-refund system for toxics shares characteristics similar to that on waste.
However, as items covered by this system require appropriate treatment, necessity of
establishing the system – thus enhancement of collection – is relatively high.
Moreover, appropriate handling of products during the collection phase must be
ensured.

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Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

Table 6 Features of five types of deposit-refund systems based on characteristics of objects of concern

ObjectAim

Necessity of
establishingobject-specificcollection systems
Handling ofcollected objects
Necessity of
securing disposal
budgetDeposit-refund system
for items useful for theirproviders (reusables)
Objects which are useful for
their providers toreuse/utilize

Deposit-refund systemfor objects whose providers
wish to collectObjects that can cause harmto their providers if notcollected

Promotion of collection andavoidance of dissipation ofvaluables that are currently
not collected under market
mechanisms
Low for valuables alone, buthigh when combined withother aims such as
prevention of disperse andpollution
Cyclical use (reuse, recycling,energy recovery)

Ensured collection of objects
whose providers canuse/utilize

Ensured collection of objects
that can do cause harm totheir providers if notcollected

High

High

Reuse

Appropriate disposal or
reuse

Appropriate disposal

Not required in principle

Not required in principle

Not required in principle

Required

Deposit-refund system
for waste

Deposit-refund systemfor valuables

Objects that are not valuable
in market (including objects
that are currently disposed of
due to their lower value)
Prevention of littering,
avoidance of inappropriate
storage and/or separation ofwaste that contains
recyclables.
Low to High(depends on objects)

Objects that potentially haveeconomic value in market

Appropriate disposal, or
cyclical use (reuse of parts,
recycling, energy recovery)
Required-7-

Deposit-refund system
for toxics
Objects that are harmful tohuman and the environment(including difficult-to-treat
wastes)Prevention of dissipation andappropriate treatment of
toxic substances/products/
waste (including avoidanceof inappropriate storage)
Very highResearch Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

We subsequently examined the basis of determining the size of the refund in therespective categories based on an economic analysis (see Figure 1).

Cost
Total marginal costof collection C(=consumers +collectors)
Marginal
external cost ofdispersion of
E
waste

t’
t
r’

r
O

Marginal cost ofcollection of
consumers CC

R*

R’

Rmax

R
Amount ofcollection

Figure 1 Economic explanation of a deposit-refund system for waste (collection cost of
consumers and collectors)

The economic analysis provided several useful insights. First, in principle, the size of thedeposit was to be determined so that it would be the same as the marginal external costof the littering of the items covered by a deposit-refund system. Second, given thefinancial resources necessary for the collection and treatment of the items, it should beconsidered natural that the size of the deposit was higher than that of refund. Thirdly, inthe case of valuables, it would be necessary to adjust the size of deposit and that of thehandling fee for actors involved in collection in order to minimize the overall social cost.
Moreover, we indicated and explained the characteristics of three methods of handling
unredeemed deposit. We also confirmed that the concepts of 1) polluter pays principle, 2)
provision of minimum service by public entities to ensure the inhabitants’ basic quality ofliving (a concept underlying waste policy in Japan) and 3) extended producer
responsibility could be applied when considering the payment of collection and treatment
cost. The suitability of the respective concepts should be determined case by caseconsidering issues such as the items covered by the respective systems, the potential andnecessity of making upstream changes by their producers, and the like.
Furthermore, we recognized four patterns of the flow of items from their producers
to consumers - U-turn, J-turn, L-turn and I-turn – and analyzed their characteristics (seeFigure 2).
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No. 205, 2010
R
Producers

Brand sorting

Producers

R

D
RetailersCollection sites

RetailersCollection sites

Brand sortingD

Consumers

Consumers
Decide where todiscard

Hoard

Municipality

Municipalitya) U-turn system
Producers

Decide where todiscard

Hoardb) J-turn system

Brand sorting

Producers

Brand sortingR
RetailersR

Collection sites

RetailersCollection sites

D

D

Consumers

Consumers

Municipality

Physical flow

Hoard

Decide where todiscard

Hoard

Monetary flow
Sort objects
not covered
by depositrefund
systemsc) L-turn system

Municipality

Removecontaminants/
sort

R

To resource
recoveryD

To disposald) I-turn system

Figure 2 Four types of deposit-refund systems categorized by flows of objects and money

The analysis suggested that there were differences in aspects such as convenience of
producers, burden of distributors, necessity of intermediate collection sites and financial
mechanisms (see Table 7).

-9-Reframing the Concept of Collection Systems with Economic Incentives

Table 7 Features of four types of deposit-refund systems based on flows of items andmoney
U-turn system

FeatureConsumers’
convenience(easiness toreturn)Retailers’burdenSorting ofobjects whenreturning to
producers

Storage space
Establishmentof collection sites
Transportation
to collection
sites

J-turn system

L-turn systemＩ-turn system

Although retailers’
Although collection
Although collection
burden is reduced andsites must besites must be
consumer’sestablished, retailers’ established, retailers’convenience is high,burden can beburden can be
economic incentives
reduced.
reduced.
are small or not given
High. It is possible to
Secured to a certain
Secured to a certain
Depends on thedesign a system in
extent (except forextent (except for
number of andwhich consumers docomplete U-turncomplete J-turn
proximity to collection
not have to dosystems*)
systems*)
sites
intensive sorting of all
the recyclables. .
Small (limited to
Small (limited toproviding related
providing related
LargestMiddleinformation to
information to
consumers only)
consumers only)
Brand sorting not
Retailers have to sortneeded. However, it isobjects according to
Not required (Done atnecessary to
Not required (Done at
the brands. Thisdistinguish whether
collection sites or by aburden can becollection sites)
municipality)
the collected item isavoided if producers
covered by theuse common items.
systems.
Although retailers’burden is largest,
existing collection
infrastructure can beused.

Required

Required

Not required

Required but the
number can be
relatively small-

Either retailers or
operators at collection
sites carry out thistask.

Not required
Required and thenumber is supposed
to be sufficientlymany
If frequency oftransportation issmall, postal/parcel
services can beutilized.

Not required
Required but the
number may berelatively small
Either municipalities
or operators atcollection sites carryout this task.

Sorting atcollection
Required
Required
Requiredsites**Complete U-turn/J-turn system: a system in which objects must be returned to the exact place where
consumers obtained them.

We discussed six main factors that influence the consumers’ behavior of returning items
covered by a deposit-refund system as well. These factors were: perception on thenecessity to return, attitudes towards the action of returning, economic incentives,characteristics of returned objects, time/trouble for storage, and time/burden required for
returning the objects. We analyzed subfactors that influenced the respective six factors(see Figure 3). Similarly, we categorized factors influencing the burden of distributors
into six – attitudes towards the action of returning, handling of deposit, acceptance of
items from consumers, storage of items, return of items to producers/intermediate- 10 -

Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

collection sites and information provision to consumers. We analyzed subfactors
influencing these six factors and discussed measures to reduce the burden. We further
indicated four incentive measures for distributors to return the items to producers andexplained their characteristics. We pointed out two different points in the flow ofdeposit-refund systems where the possibility to distinguish whether an item in question
was covered by a deposit refund system. One was when a consumer made a choice of
whether to separate an item for a refund system, and the other was when the system
accepted and judged whether the refund should be paid to the consumer.

Opportunity
to findrelevant
information

Understandings
No. ofEasiness toPerception of the aim ofobjects
carry
on waste return
discarded
VolumeCharacteristics ofissues
Unit
Compactness
returned objects
No. of
Perception onweightwhen piling up
information
Environmental
the necessity
sites
consciousness
to return
Easiness to mix
Frequency with garbage
Awareness on
Smellof discard
the possibility of(purchase)
getting refund
Perceived
value of theEasiness forobjectPerception
sorting
Time/burden
on theDistinguishAttitude
towards
Labelforfor storage
significanceability
the action ofsortingof returning Habit of
non-return
Attitude towards thereturning
Easiness foraction of returning
Attitudestorage
Availability
towards
of storage
Measures oflittering
Relation withspace
transport
Proximityneighbors(car, etc.)
to collection
ComplianceTime
Punishment
siteswith norms
Time/burden required forTime
No. ofrequiredcollection
returning the objects
for
sites
Spare
returning
Size of refund
Means oftime
Visit collection
purchasing
Economic
Cost of non-returnsites for other(garbage pricing, etc.)
incentives
reasonsHome
Availability ofDistance
Deliverytranport
Returningfrom home
containers together
Opportunity
Limitation on theto visit
Place of
Returner’s
timimg to return
collection
purchase
Householddestination(24-hoursites
incomecollection, etc.)

Returnby consumer

Figure 3 A fish-borne diagram of various factors influencing consumers’ behavior on theaction of returning items under deposit-refund systems- 11 -

Reframing the Concept of Collection Systems with Economic Incentives

We further considered a few other aspects of deposit-refund systems. For instance,
introduction of a deposit-refund system might enhance the purchase of alternative
products/packaging. When purchase of certain items was reduced for reasons such as thesize of the deposit and inconvenience for the end-users to hand in the items, producers
might be able to regain the sales of the items by improving the collection system. Anotheraspect considered was the use of unredeemed deposit. The sum of unredeemed deposits
accumulated in a deposit-refund system would differ depending on the durability ofitems upon which a deposit-refund system was introduced – which in turn influenced thelength of the period between the purchase and return of the items –, as well as on the
return rate (see Figure 4). Existing studies indicated that it was not necessary to monitor
the activities of end-users who did not return the items covered under a deposit-refund
system, and highlighted this point as an advantage of a deposit-refund system. The
system, on the other hand, had a disadvantage of having to monitor those who return, in
relation to the possibility of the abuse of the system (i.e. claiming the refund without
paying the deposit). However, the disadvantage could be overcome by setting the size ofLength of time
to returnthe refund lower than the cost of abusing the system.

Inappropriate
conditions inwhich the rateof unredeemed
deposit islarge and theprimary
purpose ofcollection
systems –collection – isdisregarded.

A combinationof the below
andthe right

Possible toinvest collected
deposit and touse thegeneratedinterest on theoperational cost

Possible toinvestunredeemed
deposits on
measuresaiming toincreasecollection rate

Function ofraising moneyis smallCollection rate

Figure 4 Outline of function of fund raising provided by deposit-refund systems- 12 -

Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

In addition to deposit-refund systems, we took a look at reward points collection
systems, a modification of various reward points systems that private actors had beenusing to promote the sales of their products (Chapter 5). We considered the reward points
collection system as a new variant of collection system that would provide financial
incentives to return the targeted items to the appropriate collection sites and analyzed
its potential and characteristics. We first reviewed the current status of reward points
collection systems as well as its challenges in general, and sought to identify reasons for
introducing the reward points collection systems and various measures to overcome thechallenges. Empirical studies suggested that the collection rate achieved by the reward
points collection system was at least higher than that of the municipal bring-systems(Table 8). We then analyzed the potential and characteristics of reward points collection
systems by comparing them with deposit-refund systems and buy-back systems (seeFigure 5 and Table 9). We found that the reception/collection of the items under reward
points collection systems and deposit-systems tended to become more burdensome thanthat of buy-back systems. Meanwhile, the range of items that could be subject to theformer would be wider than the latter. When comparing deposit-refund systems andreward points collection systems, the range of items that could be subject to the former
was larger than the latter. However, resistance of the industry might be lower in the caseof the latter. Table 10 shows the summary of features of three different collection systems
with economic incentives.

Table 8 Comparison of PET bottles collected by station collection, collection boxes instores and under a reward points collection system
in Adachi Ward, Tokyo, Japan (FY 2009)

Station collection(once a week or
twice a month）
Collection atcollection boxes instoresCollection by
reverse vending
machines at which
points areprovided*
Total

Amount ofcollection(Tonnes)

Rate ofcollection(%)

Collection percollection site
(kg/site)

1,883

76%

93

189

8%

794

403

16%

13,433

2,475

100%

3.7kg/capita/y- 13 -

Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

New productPhase 1
Deposit

Product waste
Issue of points
New productProducers

Consumers

RefundProducers

Phase 3

Deposit-refund
systemProduct waste

Consumers

Phase 2Ta x

Use of points

Figure 5 Comparison between deposit-refund system (left) and reward points collection system (right)- 14 -

Reward points
collection
systemResearch Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

Table 9 Comparison between deposit-refund systems, reward points collection systems, and buy-back systems
Deposit-refund systems

OutlineBurden on incentive
providers related totransaction
Holder of economic
incentives (e.g.
money)
Criticisms towards
unredeemed
deposits/unused
pointsInfluence on sales
Return to retailers
different from theoriginal sellers.
Additional financial
resources for theprovision ofrefund/point/buy-backAdditional financial
resources for
operation

Reward points collection systems
An incentive provider gives points to a
Collect money from a person who
person who returns an object thatobtains an object that should beshould be collected. The returner cancollected, and pay back the deposit to
use the points for buying products andhim/her when the object is returned.
services sold by the point provider.
Large; The two-way interactions that occur at different time require more time
and trouble and accounting systems. Introducing specific equipment such as bar
code can reduce the burden.
Business entities
How to deal with unredeemed deposit
often raises controversies.
Decrease in sales is an often-raised
concern.
CompleteU-turn/J-turn
Availability of collection points canattract customers.

Consumers
Complaints with unused points rarely
heard. Changes in products andservices that can be exchanged withpoints can provoke a criticism.
No influence, or perhaps increase insales. Systems can be regarded as a tool
to enhance customers’ loyalty and for
differentiation.

A clearing system is required

Not required
Possible to source include operational
cost collected together with the deposit
and unredeemed deposits.

Buy-back systems
Business entities buy designatedobjects from consumers who bring them
Small; Transaction is one-way andcompleted each time
(no one holds)-

Irrelevant. If buy back attracts
consumers’ attention, it may lead to theincrease of sales.
Possible without a clearing system

Required(Unnecessary if profit margin can makeup for it)- 15 -

Possible to cover the cost with the profit
from the sales of collected objects)

Research Report from the National Institute for Environmental Studies, Japan
No. 205, 2010

Table 10 Summary of features of three different collection systems with economic
incentivesa) Burden on incentive providers related to transaction
Buy-back system < Deposit-refund system = Reward points systemb) Criticisms towards unredeemed deposits/unused points
Buy-back system < Reward points system < deposit-refund systemc) Wide applicability of objects to be collected
Deposit-refund system > Reward points system > Buy-back systemd) Business entities’ incentives to participate in the system
Reward points system = Buy-back system > Deposit-refund system
In the last Chapter, we indicated several directions for further research concerning
the economic-incentive-based systems that seek to promote source separation andcollection of selected items. First, the theoretical analysis of the systems needs to befurther developed. Among the five categories of deposit-refund systems and reward
points collection systems reviewed in this study, especially insufficient was thetheoretical explanation of the reward points collection systems. It would be good to
explore the theoretical explanation of the systems, taking into consideration theknowledge related to discount of product price and cases in which the law of one price is
not achieved. Existing knowledge related to the significance and efficacy of subsidies for
consumers could be also utilized for this endeavor. Regarding deposit-refund systems,
this report theoretical explanation envisaged in this report was limited under a static
condition. The explanation concerning the process of achieving the optimal condition
remained undone. In addition, although this report looked into deposit-refund system forfive categories of items separately, some items can have multiple features (e.g. toxic andvaluables in reality. Further development of the theoretical discussions for these cases
would be needed. We also need to enhance our understanding on why people returnrecyclables to collection sites even when there is no financial incentive. Identification of
the conditions upon which recyclables are returned to collection sites without economic
incentives would in turn help clarify the conditions when economic incentives areneeded.
Regarding practical application, further consideration should be made on which
items should be collected more. A prevailing perception in Japan seemed to be that
deposit-refund systems were for beverage containers, but the review presented indicatedmuch broader potential. Application of the deposit-refund systems to other items, such as
items containing hazardous substances and valuables, should be included in the- 16 -

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No. 205, 2010

discussion, in addition to returnable PET bottles led by the Japanese Ministry of theEnvironment. It would require case-by-case analysis concerning who should bear the costof collection and treatment. Furthermore, on-the-ground investigations is required tounderstand the reasons why people do not return items to designated collection points
even when financial incentives are given to them. A deeper understanding on various
limitations facing consumers regarding the return of items as well as characteristics of
the items would help devise an effective measure to overcome such limitations. Whatmakes it easy for consumers to return certain items would change over time along withthe changes of life style. A deposit-refund system needs adaptation, taking these changes
into consideration. Similarly, due attention should be paid on the status of distribution
systems. In light of the changes in the selling practices, the importance of exploring
incentive-based collection systems that can be easily adapted at places such as
convenience stores and large discount shops is increasing than ever.

* This research was performed under Joint research between Fukushima University and
NIES (2007-2009), and IIIEE, Lund University and NIES (2008-2011)- 17 -