The Determinants of Waste Agricultural Plastics Generation in theRepublic of Korea

Chang YJ (Professor, Inje University, ROK)
Kim GS (Professor, Hoseo University, ROK)1)
Kim GY (Professor, Hansung University, ROK)

1. Introduction
Modern farming takes advantage of much plastics and thus inevitably
waste

agriculturalplastics(wap)aregenerated

verymuch.

Vinyl-house horticulture and insulated rice seedbed preparing arepracticed nationwide and in the year of 2015 approximately 320
thousand tons of wap are generated in total, which has remained
almost the same through the last decade. By kind the most dominant
one is mulching LDPE (approximately 40%) followed by HDPE (35%)
and Vinyl-house LDPE (20%). Collection rate has stagnated at a little
less than 60%. So collection and proper treatment of wap, including
recycling, is one of a big social concern in Korea.
Waste agricultural plastics is one of municipal solid waste in
the ROK, the final treatment of which is the responsibility ofso-called basic administrative units. (like eup, myon, dong)2) So inprinciple basic administrative units have to collect and recycle or dofinal disposal (landfilling and incineration). However, because ofmarket failure in collection and treatment, Korea Environmental
Public Corporation (KEPCO) intervenes in markets by establishing acollection

andtreatment

network.

KEPCO

receives

wap

from

designated private collectors and treat by itself or sell the collected
wap to private treatment companies. To have this whole system
work, KEPCO subsidizes farmers through designated private collectors
1) Corresponding Author : gsgim@hoseo.edu
2) This does not mean that farmers have no legal problems with just leaving out wap in thefield. They are legally prohibited from disposing waste improperly.

for bringing wap to community collection point. Then designatedprivate collectors transport the collected wap to KEPCO-operated
storage area. On the other hand KEPCO has once subsidized private
treatment companies to alleviate the accumulation of untreated wap.
Of course the market system encompasses all these KEPCO network.
Thus market transactions bypassing this KEPCO network are always
possible. For example vinyl-house wap may be picked up by privatecompanies

directlyandrecycledor

soldtofinal

treatment

companies.
Vinyl-house waste cover-plastics are relatively clean and thenwell collected and almost recycled. However, mulching LDPE andHDPE waste plastics, which occupies 76% of total 322,964 tons
generated in 2015, would be a problem if left intact. Un-collected
andimproperly

treatedwaste

plastics

isdetrimental

totheenvironment and also undermines agricultural land productivity.
Governments

atvarious

levelshaveusedvarioussubsidiestopromote complete collection and proper treatment of wap. However,they have not been flexible enough to tailor these incentive measures
to changing environment like demographic trend in agricultural
regions and price fluctuations in recycled products and petroleum
markets, etc. The result is still insufficient collection on the one
hand and over-capacity for treatment on the other hand. The overall
treatment

capacity

has

been

once

short.

Atthat

time

KEPCO

subsidized private treatment firms to enhance the overall capacity.
Now the situation has changed. Private treatment firms have to buy
wap from KEPCO through a competitive auction. One important
policy question is what the optimal combination of public and private
treatment capacity is. Estimating the determinants of wap generationand then making an accurate prediction of generation and collection
is a first step to answering that important question.
The paper proceeds as follows. In the next section we describe
the data to be used and explains the methodology for the estimation.
In the third section we provides with the empirical results anddiscusses its policy implication. Lastly, we make some concludingremarks.
2. Data and Methodology
Panel data covering wap generation in 9 regions across 12 years(2004 through 2015) are regressed on potential determinants likesizes of paddy, field and vinyl house farming as follows.

        (*)

The following <Table1> is the summary statistics for our data.
<Table1. Summary Statistics>
MPE
26,289.56
12,146.60
1,319.00
59,634.00

mean
stand. dev.
min.
max.

paddy
106,379.23
61,947.29
18.00
219,337.00

field
4,439.76
4,729.77
0.00
18,287.00

House80,904.06
27,252.56
52,100.00
152,095.00

note : MPE, paddy, field, House stands for mulching plastics generation, size ofpaddy field, size of dry field, size of vinyl house, respectively.

We

havecheckedfirst

so-called

poolabilityoftime-series

andcross-sectional data. Based on F-statistic (0.42652) we could reject
the null hypothesis at 5% level that the coefficients are not stable.
Next

we

have

checkedautocorrelation

inerrorterms.

Breusch-Godfrey/ Wooldridge test has detected the presence ofautocorrelation. So we have added the lag term for dependent
variable to set our final regression model as follows.

              (**)

By Breusch-Godfrey/ Wooldridge test we have identified that there is
no autocorrelation in error terms. (chi-square statistic=2.1548) Also,by Honda Test we have known that there is no individual effect(standardnormalstatistic=0.024989),

but

thereistimeeffect(standard normal statistic=4.6167) Finally by Hausman test we havechosen random effects model (chi-square statistic=5.6698)
3. Empirical Results and Discussion
The regression results are reported in the following <Table2>. House(size of vinyl house farming) and lag(MPE) are significant at 5%, 1%level, respectively. The effect of lag(MPE) is statistically significant
and moreover it is strong. Almost 67 percent of wap generated in
the last year is again generated this year in inertia. Notice that theeffect of field (size of dry field) is almost the same as the one ofHouse (size of vinyl house farming), but it is not statisticallysignificant.
<Table2. Regression Result>coefficientintercept
paddy
fieldHouselag(MPE)

574.9600
0.01890.08930.07370.6715standarderror
1901.1000
0.01160.14030.03020.0749t-valueP-value

0.3024
1.6276
0.63612.44098.9676

0.76300.10700.52630.0165 *0.0000***note : *,**,*** stands for 10%, 5%, 1% significance level, respectively.

Based on this estimation, we have forecasted the future MPE. In
order to do that, we needed to estimate the future values ofexplanatory variables first. For this purpose, we have regressed eachof explanatory variables on respective previous values and time. We
have used the estimated value of one coefficient as its future value
if it is statistically significant. In case we didn't get statisticalsignificance we have just averaged the previous 5 years' values touse as each of its upfront 5 years' future values. Now we have put
the estimated values of explanatory variables into the estimatedequation (**) to get the future values of MPE, the 95% confidence
interval for which is summarized in the following <Table3>.

<Table3. 95% Confidence Interval for Prediction of MPE>
year
2016
2017
2018
2019
2020

lower bound
221,466.6
224,616.4
226,404.7
190,964.2
174,274.4

point estimate
247,363.4
247,827.1
248,955.6
232,544.9
209,293.8

upper bound273,260.2
271,037.8
271,506.6
274,125.6
244,313.2

As you can see, the generation of MPE is predicted to decline after
2019. It is predicted to stabilize around 200 thousands ton per year
sincethen.

Assuming

current

treatment

capacity(private

100

thousand and public 80 thousand annually) and rate of collection(approximately 60%) the current treatment capacity seems to be able
to handle this 200 thousands ton safely.
4. Concluding RemarksIn contrast to the case of the ROK, Japan and Taiwan define wap as
an industrial waste. So farmers are responsible for proper treatmentof wap. In both countries central government doesn't take such anactive role as in Korea. In other words collection and treatment are
made basically by market mechanism. Farmers buy the treatment
service at a positive price. Collection rates are almost 100%. To havethis market mechanism work more smoothely, Taiwanese government
compensate farmers for sorting and bringing waste plastic containers
to treatment firms, but not for general wap. Japanese government
too compensate farmers for bringing waste plastics to collection
points. Under the present system, Korean government (KEPCO infact) has always to care about optimal subsidies for collecting,transporting and treating wap. In light of Japanese and Taiwaneseexperiences,

Korea

also

needs

tostrengthena"polluterpays"

principle and have collection, transportation and treatment of wap
made more voluntarily by stakeholder.

References
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Environmental

Protection

Administration,

web

page

:

recycle.epa.gov.tw/Recycle/en
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ofwasteagricultural plastics in Japan, the Republic of Korea, China," Tech
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