This report is a result of an EPA-convened dialogue, and is a work product of the 

dialogue participants, and not EPA. The views expressed are those of the participants 

and do not necessarily reflect the views or policies of the EPA and should not be 

construed as implying EPA consent or endorsement. Reference herein to any specific 

company or commercial products, process, or service by trade name, trademark, 

manufacturer, or otherwise, does not constitute or imply its endorsement, 

recommendation or favoring by the United States Government. 
1

Final Report of the

Dialogue on Sustainable Financing of 

Recycling of Packaging at the Municipal Level

September 19, 2011

Submitted to the U.S. Environmental Protection Agency by

The Keystone Center

(Prepared under contract EP-W-09-011, Task Order 072)

EPA-530-R-11-004
2

Table of Contents

Executive Summary 4

I. Introduction and Background 10

Scope and objectives

Impetus for the dialogue

Task of the dialogue group

Participants

About this report

II. The Dialogue 16

Project format and protocols

Information-sharing

• Cross-sector learning

• Informational webinars

Formation of and charge to work groups

Participant perspectives regarding the scope

Traits of a successful system

III. Strategies for Financing Recycling 22

Introduction

A. Producer-funded strategies 24

• EPR overview

• Cost internalization

• Partial cost internalization

• EPR Eco-Fees

B. Consumer-funded strategies 40

• Product-based advance disposal fees

• Deposits and unclaimed deposits

C. Rate-payer funded strategies 57

• Fees at time of recycling

• Subscription service

• Pay-as-you-throw

D. Tax-payer funded strategies 78

• Taxpayer-funded

• Tax credits or other financial incentives

• Federal funding for recycling infrastructure

Possible next steps regarding sustainable financing 96

IV. Strategies for Optimizing the Current System 98

Introduction

Summary recommendations

Optimization project details

1. Package design and material collection/recovery
3

2. Recycling incentives

3. Consumer education program

4. Material collection

5. Material sorting

6. Aftermarkets – exchange resource for recovered packaging materials

7. Aftermarkets – benchmarking recycling rate by material

8. System decision-making

V. Final Observations 118

VI. Appendices 119

A. Sample letter from state government to EPA requesting the dialogue 

B. Participant list

C. Glossary of terms
4

Executive Summary

The Dialogue on Sustainable Financing of Recycling of Packaging at the Municipal 

Level was a multi-stakeholder, cross-sector dialogue convened by the U.S. 

Environmental Protection Agency (EPA) at the request of several state government 

agencies. 

Scope and objectives

The dialogue focused on packaging and printed materials found in the municipal waste 

stream from households, businesses, institutions, and locations away from home. Longterm goals included:

• Optimization of existing components of the recycling system.

• Identification of mechanisms to address shortfalls in the current recycling system 

– including the need for long-term financing – and opportunities for fully utilizing 

the existing value chain.

• Maximization of the source reduction, collection, reuse, and recycling of 

packaging and printed materials.

EPA enlisted the help of The Keystone Center (www.keystone.org) in convening and 

facilitating the dialogue, and assisting stakeholders in developing the contents of a 

publicly available report with the following major components:

1. A set of proposed projects to advance the goals set out above, including estimates of 

the resources required, a timeline, and expected benefits for each project. 

2. Evaluations of key strategies for financing of systems to recycle packaging from 

consumer packaged goods as well as printed materials. Evaluations are informed by 

perceived advantages and disadvantages, and represent a balanced summary of 

participants’ views regarding a given strategy’s potential to align with the traits of a 

successful system (as envisioned by the dialogue group). 

Participants held a wide array of preferences regarding the optimal scope of the 

deliberations, and discussion regarding the focus and parameters continued for 

approximately the first half of the project. The major topics that generated discussion 

and illustrated divergence among stakeholders included:

Extended Producer Responsibility

Many participants would have preferred to focus largely or exclusively on certain 

financing strategies they believed to be most promising, especially extended producer 

responsibility (EPR). At least some stakeholders believe the dialogue missed a critical 

opportunity for productive deliberation and cross-sector learning by not pursuing deeper 

analysis of EPR.
5

Materials

Some participants believed that inclusion of printed paper in the scope of inquiry was 

inappropriate since relevant industry sectors (e.g., paper manufacturing, printing and 

publishing) were not represented at the table. Alternatively, a few participants preferred 

a focus on priority material types (e.g., aluminum, cardboard, steel) rather than all forms 

of packaging.

Dedicated focus on recycling

Some participating stakeholders – largely from industry – raised concerns about the focus 

on recycling and advocated for a more holistic assessment of end use options, hoping to 

explore how best to maximize the recovery of value (in financial and environmental 

terms) from the municipal solid waste stream. They preferred to be able to consider an 

integrated waste management approach including composting and waste-to-energy, 

determining the appropriate management strategy for each set of circumstances. Also, 

some participants from various sectors emphasized the need for source reduction and 

reuse to play a more significant role. 

The purpose of the project was to solicit a range of stakeholder opinion and identify 

promising options rather than attempt to achieve agreement among participants. This 

report therefore does not represent consensus views but rather serves as a summary 

of deliberations, including findings and some jointly developed recommendations.

Participants

The dialogue convened a representative group of key stakeholders: ten consumer 

packaged goods companies, two retailers, seven state governments, five local 

governments and six non-governmental organizations. This configuration was intended to 

ensure the inclusion of perspectives from brand owners associated with the majority of 

packaging used for products consumed in the home, national retail chains that sell their 

own private label products, states with different geography, population diversity and

deposit laws; and a broad range of experience domestically and internationally with 

diverse approaches to financing for recycling.

The Dialogue Process

The initiative began with interviews of key stakeholders in the summer of 2010 to test the 

scope, gather background information and anticipate perspectives and interests. The 

process included four in-person meetings – in September and December 2010, and 

January and April 2011 – and intensive workgroup activity to develop substantive drafts 

for deliberation by the full participant group. Participants also spent time developing a 

shared base of knowledge through webinars on specific topics (including financing 

systems in other markets, and the infrastructure of materials recovery and processing in 

the U.S.), cross-sector learning through question-and-answer exercises between brand 

owners and public sector participants, and a mapping exercise to understand the basic 
6

components and their relative strengths and challenges within the current system. The 

map included input from participants’ professional perspectives on the different phases of 

the system: package design, product distribution/retail sales, consumer generation, 

collection, and sorting (including the materials market, composting, landfill and 

combustion with energy recovery).

To further set the stage for optimizing the existing system and analyzing potential 

financing strategies participants discussed the characteristics and objectives of an 

effective recycling system for packaging and printed material. A successful system 

should:

1. Provide consistent and accurate consumer education that increases 

participation and drives quality results.

2. Provide wide access to recycling opportunities (including underserved and 

non-residential). 

3. Reflect lifecycle/system based thinking (from initial package and printed 

material design to end of life management) and take into account relevant 

environmental and public health benefits/impacts.

4. Foster a system-based approach that is flexible and consistent across 

jurisdictional boundaries.

5. Establish and meet clear performance measures. 

6. Produce marketable commodities and foster innovation that serves to improve 

quality and efficiency. 

7. Be economically self-sustaining, improve efficiency and enable cost control.

8. Incentivize all participants in the system to maximize efficiency and recovery 

for recycling.

9. Ensure feedback loops across the system (e.g. product design, waste 

collection, after market channels).

10. Ensure clear recognition and allocation of roles and responsibilities.

From these traits, participants also developed criteria for evaluating financing strategies. 

The assessment exercise considered each strategy’s potential to: 

• Achieve financial sustainability – Providing reasonably secure, sufficient, stable 

and ongoing financial resources; contributing to a long-term solution; and 

ensuring that funds are used for the intended purpose.

• Positively affect the value chain and associated communication and action –

Ensuring feedback loops across the system (e.g. product design, waste collection, 

after-market channels) to resolve current market disconnects; incentivizing 

consumers effectively; influencing consumer behavior in needed ways; improving 

recycling rates; incentivizing innovations in packaging design and processing 

technology; encouraging markets for recycled materials; allowing clear 

recognition and allocation of roles and responsibilities.

• Enable efficiency and cost control – Operating efficiently and reducing total 

system costs in the long run; improving the efficiency of the recycling system; 

controlling costs.
7

• Maximize consistency, reach and scalability – Implementing consistently across 

jurisdictions; reasonably accommodating the full array of consumers (e.g. singlefamily, multi-family, commercial and away-from-home sources and underserved 

communities).

• Achieve satisfactory ongoing performance – Generating measurable performance 

data; producing high-quality commodities; demonstrating sufficient flexibility to 

allow for improvements in technology.

• Feasibility – Garnering support from consumers, retailers, brand owners and 

elected officials (political feasibility).

• Degree of impact on the present challenges with financing.

• Likely cost in relative, qualitative or quantitative terms.

Work Products

Participating stakeholders identified, examined and evaluated a total of eleven strategic 

options for financing recycling of packaging and printed material, and also proposed the 

advancement of eight distinct projects to optimize the current system. Together, these 

two work streams considered opportunities for enhancing the funding available to the 

system while reducing the cost of the system’s operation. 

Strategies for Financing Recycling

The assessments were intended to provide a balanced summary of participating 

perspectives regarding the advantages and disadvantages of each strategy, providing a 

strong foundation for leaders in the public, private and civic sectors to determine how 

best to address the challenge of financing recycling. The strategies are categorized by 

general source of funding: producers, consumers, rate-payers, and taxpayers. 

• Producer-funded strategies

1. Cost internalization

2. Partial cost internalization

3. EPR Eco-Fees

• Consumer-funded strategies

4. Product-based advance disposal fees

5. Deposits and unclaimed deposits

• Rate-payer funded strategies

6. Fees at time of recycling

7. Subscription service

8. Incentives

• Taxpayer-funded strategies

9. Taxpayer-funded

10. Tax credits or other financial incentives

11. Federal funding for recycling infrastructure
8

Participants defined and reviewed each strategy, deliberated about its potential to support 

an effective system and, in some cases, noted conditions for success or clear synergies 

with other strategic approaches. The dialogue group was not tasked with ranking or 

prioritizing the strategies or with reaching consensus on a preference. Opinions varied 

widely on several of the options. Stakeholders observed that many of the strategies could 

not be utilized productively in isolation but would need to be implemented in conjunction 

with other financing strategies. 

Strategies for Optimizing the Current System

Eight potential projects were identified as strategies for improving the effectiveness and 

efficiency of the existing recycling system, to meet the characteristics of success that the 

group discussed. The projects evolved out of the mapping exercise through which 

participants identified challenges or areas for improvement at each phase of the system. 

Participants jointly developed a set of project briefs – including the purpose, objectives, 

expected results, metrics, work plan, and identification of who needed to take action – to 

address those challenges. 

Projects included:

1. Package design and material collection/recovery – To provide package designers 

with information and a feedback loop that will enable material recovery by 

identifying existing design for recycling guidelines, gaps in available resources 

for design guidance, ways designers can be incentivized to follow guidance, and 

material and format trends in the U.S. for growing and underserved material 

streams.

2. Recycling incentives – To identify recycling incentive programs/strategies proven 

to significantly increase consumer participation, describe relevant program design 

attributes, and identify enablers and barriers to success.

3. Consumer education program – To develop a model multi-stakeholder public 

education program that is effective by gathering existing research (or conducting 

new research), identifying messages that influence behavior, and developing and 

piloting a consumer education program.

4. Material collection – To provide a comprehensive analysis of the strength and 

weaknesses of the existing collection system, recommend methods to address 

issues or steps that need to be taken, define best practices, and recommend 

potential sources of financing for optimizing collection.

5. Material sorting – To identify steps to improve the effectiveness of material 

sorting by assessing sorting practices and technology to pinpoint interventions 

that could increase throughput, yield, quality and value, accommodate new 

materials and reduce cost.

6. Aftermarkets – To foster utilization of recovered packaging materials, providing 

an online database of recovered and/or processed materials available for use.

7. Aftermarkets – Benchmarking recycling rate by material, to provide consistent, 

transparent and broadly-supported data on material recycling rates for specific 
9

commodities by conducting a national survey of and allow calculation of relevant 

recycling rates.

8. System decision-making – To produce a model of decision-making by analyzing 

current decision-making process and identify opportunities and barriers that affect 

optimization of the system.

Final Observations

The dialogue was not intended to solve every relevant challenge or build agreement on an 

optimal solution, individuals came to the table with diverse hopes and expectations for 

the focus and outcome, and many participants would have preferred deeper and more 

detailed analysis of potential strategies than available time and resources allowed. 

However, participating stakeholders generally gained a fuller understanding of the overall 

recycling system, the challenges facing its current configuration, and the perspectives of 

other key stakeholders on the range of options available for overcoming those challenges. 

This enhanced understanding together with the consequent development of new avenues 

of communication and interactions can allow for future efforts to move further toward 

sustainable financing for recycling of packaging and printed material at the municipal 

level. 
10

I. Introduction and Background

This report constitutes the work product of The Dialogue on Sustainable Financing of 

Recycling of Packaging at the Municipal Level. At the request of several state and local 

governments, the U.S. Environmental Protection Agency (EPA) convened this multistakeholder initiative in summer 2010 to address financing challenges confronting 

recycling of packaging waste. This dialogue represented a significant opportunity to 

identify ways to reduce packaging waste, increase recycling, and reduce the overall 

impact of packaging materials on the environment. 

Scope and objectives

The dialogue focused on packaging and printed materials found in the consumer waste 

stream from households, businesses, institutions, and locations away from home. 

Goals of the project included:

• Optimizing existing components of the system for recycling.

• Identifying mechanisms to address shortfalls in the current recycling system –

including the need for long-term financing – and opportunities for fully utilizing 

the existing value chain.

• Maximizing the source reduction, collection, reuse, and recycling of packaging 

and printed materials.

Impetus for the dialogue

In July 2009, several state government agencies wrote to EPA asking the agency to 

consider convening a multi-stakeholder dialogue to explore sustainable financing 

strategies for recycling at the municipal level. The letters consistently stressed the need 

for a system of financing that alleviated the burden on local recycling programs that 

currently serve as the backbone of sustainable materials management in the U.S. The 

state agencies expressed concern that such programs will fall short of their potential to 

deliver benefits such as job creation, conservation of resources and energy, and 

greenhouse gas reduction, if they continue to rely solely on local funding sources that are 

severely limited and subject to many competing demands. The letters posited that 

community recycling programs generally are stagnating at a time when the commodity 

industries have become more dependent than ever on recovered materials. Furthermore, 

the principal supply base of those recovered commodities is an infrastructure financed by 

local government with little ability to expand, threatening the sustainable use of materials 

in the U.S. and around the world. The state agencies noted the emergence in other 

markets of “viable alternatives to building a sustainable materials economy that depends 

on the local tax structure,” and that such alternatives can lead to increased recycling rates 

and improved efficiency in local programs while providing commodities and helping to 
11

meet the needs of consumer product companies moving to more environmentally 

sustainable packaging. A sample letter is included with this report as Appendix A.

Subsequent presentations by state and local government representatives at in-person 

meetings of the participant group provided a more detailed characterization of the nature 

and scale of the current challenges in financing recycling at the municipal level. Those 

presentations noted:

• Packaging comprises nearly a third of the U.S. municipal solid waste stream, and 

continues to grow in volume and material complexity (e.g., composites, films, 

bio-based). The cost of managing packaging waste continues to increase and falls 

largely on the public sector. Containers and packaging generation increased by 

13 million tons since 1990, adding $1.56 billion in cost to government.1

• Municipal recycling programs do not adequately address all sources of packaging 

materials generated, including commercial, institutional, and away-from-home 

locations.

• Recycling rates generally have been stagnant for the last decade, with 

approximately 30% of the waste stream captured for purposes of recycling.

• An opportunity exists to recover valuable materials from used packaging for use 

as raw material inputs in the remanufacture of consumer products. 

• Government budget pressures discourage any new taxes or fees, and require 

recycling to compete with critical services (e.g., schools, libraries, police, and 

emergency response) for resources. Budgeting process constraints include 

varying conditions each year, challenges with long-term planning and consistent 

implementation, and inelasticity with regard to commodity pricing. In a 2010 

survey, 70% of responding local recycling coordinators throughout the U.S. 

indicated that their agency or program had suffered recent budget cuts due to the 

ongoing recession, and of those, 61% noted that the cuts included staff 

reductions.2

 

• The system’s reliance on local decision-making results in a patchwork approach 

that is inconsistent across jurisdictions, and largely constrained to short-term, 

compartmentalized (rather than holistic) analysis and planning. Programs lack 

consistency in materials collected, scale and impact of education and outreach 

investments, and standards and processes employed.

The public sector stakeholders observed that the party responsible for waste management 

(local government) has no or little ability to influence volume or composition of 

materials, or to affect materials markets. The current, government-funded system suffers 

from inherent constraints, market dislocations (the inability to control costs and address 

systemic problems), an unsustainable resource base (e.g., disposal fees, property taxes), 

and lack of sufficient resources for capital expenditures, program expansion, and 

outreach and education. Greater harmonization would facilitate public participation, 

 1 EPA, “Municipal Solid Waste in the US, 2007 Facts and Figures” (EPA 530-R-08-010, November 2008),

http://www.epa.gov/epawaste/nonhaz/municipal/pubs/msw07-rpt.pdf 2 Henry Leineweber, “What’s Eating Recycling Coordinators,” Resource Recycling, December 2010: 19-

22.
12

align programs with market demand, and enhance economies of scale. Additional 

resources are needed to:

• Modernize existing collection programs;

• Make strategic investments to resolve market disconnects;

• Greatly bolster away-from-home collection;

• Address multi-family and non-residential collection needs;

• Address gaps in providing infrastructure;

• Capture new materials;

• Improve the processing capacity of materials recovery facilities (MRFs);

• Establish effective incentives for program participation;

• Improve outreach and education;

• Ensure compliance; and

• Ensure data collection and reporting. 

The call for dialogue implicitly asserted the importance of sustaining and expanding 

recycling efforts in the U.S. There is ample data demonstrating that using recycled inputs 

conserves energy over using virgin inputs. For example, making an aluminum can from 

recycled aluminum requires 95% less energy than making a can from virgin feedstocks.3

 

Making plastic packaging from recycled feedstocks not only reduces energy demand in 

manufacturing, but it also eliminates consumption of valuable petrochemical resources.

Manufacturing with recycled inputs also reduces greenhouse gas (GHG) emissions – for 

example, in 2009, we recycled 82 million tons of MSW in the US, avoiding emissions of 

178 million metric tons of carbon dioxide equivalent4 (about 3% of the total US GHG 

 3 Data from EPA’s Waste Reduction Model (WARM), version 11. http://epa.gov/warm

4 EPA,“Municipal Solid Waste in the US, 2009 Facts and Figures” (EPA530-R-10-012

December 2010), http://www.epa.gov/epawaste/nonhaz/municipal/pubs/msw2009rpt.pdf
13

emissions for the same time period)5

. Further, a recent study has shown that recycling is 

an extremely cost-efficient GHG abatement strategy:

 

 

6

Recycling also contributes to growth in green jobs and state revenues – one recent study 

concluded that the recycling industry in South Carolina grew from 26,537 employees in 

1995, to a total of 37,440 employed in 2005 with $6.5 billion in economic impact, 

contributing $69 million in state tax revenues.7

Participants

The letters from state government agencies to EPA requested that the dialogue involve 

representatives of state and local government, not-for-profit advocacy organizations, and 

the manufacturers of products and packaging that are managed in the municipal recycling 

stream. EPA identified and invited key stakeholders in consultation with the facilitators. 

The size of the participant group was kept relatively small to better manage a focused and 

time-bound set of deliberations, and to encourage candid and creative dialogue.

 5 EPA, “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2007” (EPA430-R-09-004, April 

2009). http://www.epa.gov/climatechange/emissions/usinventoryreport09.html

6 McKinsey & Co, “Pathways to a Low-Carbon Economy; Version 2 of the Global Greenhouse Gas 

Abatement Cost Curve”, January 2009. http://globalghgcostcurve.bymckinsey.com/

7 EPA, “The Economics of Recycling in the Southeast: Understanding the Whole Picture”

http://epa.gov/region4/waste/rcra/mgtoolkit/economic.html
14

Participants ultimately included representatives of ten consumer packaged goods 

companies, two retailers, seven state governments, five local governments, three 

environmental public interest organizations and other non-governmental organizations. 

The consumer packaged goods companies represented food, beverage, health and beauty, 

and home cleaning products, ensuring that the majority of packaging used for products 

consumed in the home would be represented at the discussion table. Those brand owners 

sell their products in international markets, and brought to the deliberations the benefit of 

their experience with financing for recycling systems in other countries. Retailers 

represented large-scale national chains that also make and sell their own private-label 

products and have a demonstrated interest and involvement in addressing packaging 

issues. Participating state and local government agencies represented geographic and 

population diversity, including states with and without container deposit laws, and 

brought a range of experience of and knowledge of various recycling, financing, and 

incentive programs. (Local government representatives included both city and county 

interests.) Non-governmental organizations brought a wide variety of experiences 

working for more sustainable management of packaging.

EPA officials participated as observers, providing occasional technical assistance upon 

request. Funding for the project was supplied entirely by EPA. 

Participation in the dialogue was by invitation only, although meeting summaries were 

made publicly available. A full list of participants and federal observers accompanies this 

report as Appendix B.

Task of the dialogue group

EPA asked participating stakeholders to produce a publicly available report with the 

following major components:

1. A set of proposed projects to advance the goals set out above, including estimates 

of the resources required, a timeline, and expected benefits for each project. 

2. Descriptions of key strategies for financing of systems to recycle both packaging 

from consumer packaged goods, and printed materials. The description of each 

strategy will be accompanied by perceived advantages and disadvantages, a 

balanced assessment of the strategy’s potential for aligning with the traits of a 

successful system (as envisioned by the dialogue group), and an outline of 

information needs going forward. 

About this report

This report was assembled and edited by the dialogue’s facilitators, provided by The 

Keystone Center (www.keystone.org). The report summarizes the participant group’s 

deliberations, characterizing perspectives shared during meeting discussion – including 

notable convergences and divergences – and presents all jointly developed 
15

recommendations. This document does not represent or describe a consensus among 

participating stakeholders, since consensus was not the goal of the project. However, 

levels of agreement were assessed at many points and are characterized in this report. 

Viewpoints are not attributed to individuals, although occasionally the source of a 

perspective is identified by sector. 

Since this report serves as the dialogue’s ultimate work product, it consolidates a good 

deal of written content – especially work group output – produced by participants 

throughout the course of the project. While some revisions to format and structure were 

made in incorporating that written material, the substance of the report – including both 

areas of agreement and disagreement – stem directly from the stakeholders’ deliberations.
16

II. The Dialogue

Project format and protocols

During the summer of 2010, facilitators interviewed the invited participants to assess 

stakeholder perspectives on the defining problem, inquire about lessons learned from 

existing systems and programs throughout the U.S. and in other markets, note various 

visions of an optimal system in the U.S., and solicit suggestions for a successful multilateral dialogue on sustainable financing. 

Four in-person meetings of participating stakeholders were held in Washington, DC – in 

September and December of 2010 and January and April of 2011. Informational 

webinars occurred between meetings to add to the group’s knowledge base. Two 

workgroups were formed to conduct more in-depth deliberation on specific topics and to 

draft text for the full group’s consideration. One work group focused on identifying 

opportunities for optimizing existing system components, and the other on assessing a 

range of strategies for financing the overall system. The meeting summaries and the 

webinar presentations can be found at: 

http://www.epa.gov/conserve/smm/sfmr/packaging.htm

Participants were asked to adhere to the following protocols:

• Respect the collaborative process of dialogue and participate in good faith.

• Comments made during meeting discussions were off the record and not for 

attribution. Participants were free to share their personal views and ideas 

regarding the dialogue with others outside of this process, but not to quote one 

another or characterize others’ views outside of the meeting. 

• Participants were understood as representing the interests of their organization of 

affiliation or constituency, but strongly encouraged to voice their personal views 

and not restrict themselves to institutional positions during discussion. 

Information sharing

Recognizing that the dialogue faced a challenge of imperfect information (for example, 

regarding the performance and progress of various programs) and that participants 

represented a wide diversity of experiences and domains of expertise, several means were 

employed to broaden the shared base of knowledge.

Cross-sector learning

State and local government representatives responded formally in depth to several 

questions posed by brand owners regarding information points such as typical cost items 

in a recycling system, priority financial issues in the current system, and how additional 

resources might be allocated.
17

Brand owners presented information about classification, concentration, ownership, 

productivity, and technological capabilities of MRFs from a study recently commissioned 

by the Grocery Manufacturers of America.

Informational webinars

The facilitators and EPA also convened five webinars to supplement the in-person 

meetings of the dialogue. Topics and presenters typically were suggested by dialogue 

participants. The webinar served as optional, informational sessions, intended as 

opportunities for the ongoing deliberations to benefit from information requested by 

several participants about notable programs and systems. Each session is described 

below very briefly; presenters’ names and affiliations are provided, along with electronic 

links to on-line copies of the presentations given.

The first session focused on understanding approaches to financing and other related 

dimensions of recycling programs in the Canadian provinces of Ontario and British 

Columbia. Presenters were asked to provide an overview of financing and management 

for specific programs in question, describe successes and challenges, means by which 

targets were established, analysis of overall effectiveness, and any information available 

regarding the disposition of materials collected, per capita waste generation as well as 

recovery of materials under the program, the costs associated with different recovery 

rates, and recycling rates (i.e., costs, metrics). Presentations included:

• Overview of EPR for packaging – Derek Stephenson, President, StewardEdge

• Historical overview of EPR for recycling in British Columbia – Ron Driedger, 

Executive Director, BC Used Oil Management Association

• Current snapshot of product stewardship in British Columbia – Kris Ord, 

Manager, Community Waste Reduction, British Columbia Ministry of 

Environment

• Case study of EPR for packaging in Ontario – Derek Stephenson, President, and 

Mustan Lalani, Analyst, StewardEdge

The second session began with a broad overview of collection and sorting from a waste 

hauler/management perspective, anticipating what is on the technology horizon and 

suggesting opportunities for and potential barriers to recycling more packaging. The 

second provided an overview of issues in processing (post-MRF) plastics used for 

packaging. Presentations included:

• Recycling at the MRF – Richard Abramowitz, Director of Public Affairs, Waste 

Management Recycle Affairs

• Plastic Recycling: A Snapshot on Markets, Technology, and Trends – Keefe 

Harrison, Director of Communications, and Liz Bedard, Director of Rigid 

Recycling Plastics Program, Association of Post-Consumer Plastics Recyclers

The third session featured detailed overviews of the approaches to financing and 

management of EPR recycling programs in Austria and Belgium, as well as well as 
18

lessons learned thus far in execution of those systems, how and by whom targets were/are 

established, information on the disposition of materials collected, and information on 

both waste generation and recovery of materials under the programs. Presentations 

included:

• ARA: Producer Responsibility Put into Practice – Christoph Scharff, CEO and 

President of ARA Altstoff Recycling Austria

• Fost Plus – William Vermeir, Managing Director of FostPlus in Belgium. 

The fourth session provided a European perspective of EPR in practice, with specifics on 

the inception and growth of the different EU EPR schemes, and considerations for 

financing of a packaging recovery system. The session also provided a review of market 

conditions for packaging materials, including domestic collection and exports.

Presentations included:

• European Perspective on EPR – Jane Bickerstaffe, Director, The

Industry Council for Packaging and the Environment (INCPEN)

• Packaging Recycling Markets – Jerry Powell, Executive Editor,

Resource Recycling

The fifth session provided data, perspective and strategies for energy recovery from endof-life packaging materials. Presentations included:

• Energy Recovery: A Viable Resource Management Option – Jeff

Wooster, Plastics Sustainability Leader, The Dow Chemical Company

Formation of and charge to work groups

Two diverse, cross-sector work groups were formed to develop draft work products for 

review and discussion by the full plenary group. These cross-sector work groups were 

limited in size with the understanding that all participants would have an opportunity to 

comment on and help refine the work products of those groups. Participants worked 

together to determine the respective charges to the work groups, while remaining 

consistent with the dialogue’s prescribed scope. 

The Financing Strategies work group was charged with identifying and assessing key 

options for financing the overall system for recycling of packaging and printed material 

at the municipal level. In accordance with project objectives, participants were asked to 

develop balanced analyses of each strategy, but not to rate or prioritize them in any way. 

It should be noted that the financing strategies work stream was not tasked with 

developing recommendations for future action, although many participants would have 

preferred such a charge.

During the early months of the dialogue, all participants also undertook to map out the 

basic components of the current system of managing packaging waste from consumer 
19

products in a preliminary effort to share perspectives on what aspects of that system are 

and are not working well. This collaborative exercise served as an internal informationgathering activity, and enhanced the group’s collective understanding of challenges and 

opportunities within the existing system. Participants considered the following basic 

components and sequence of the system: package design, product distribution / retail 

sales, consumer generation, collection, and sorting (including the materials market 

[recycling], composting, landfill, and combustion with energy recovery). Individuals 

were asked to provide input from their own professional perspectives (e.g., material, 

technology, policy, infrastructure, consumer behavior, and economic issues), specific to 

management of packaging.

Based on plenary discussion of this mapping exercise, the plenary group identified

priority opportunities for optimizing components of the existing system. The 

Optimization work group was then established to develop “project briefs” –

implementable recommendations – for those opportunities. The whole group also 

brainstormed key strategies that merited exploration as options for financing a recycling 

system, and based on this list the Financing Strategies work group was formed.

Participant perspectives regarding the scope

While stakeholder participation was robust and consistent throughout the dialogue, 

several participants suggested significant adjustments to the scope of the project. Such 

adjustments were generally not feasible due to the necessity of adhering to the original 

purview given time and resource constraints, and, in some cases, due to contrasting 

preferences among participants. 

Materials

Most participants supported the decision to include printed material in the scope of 

discussion, believing that high-level strategies appropriate for packaging would likely be 

applicable to printed material as well. However, some participants believed such 

inclusion was inappropriate since relevant industry sectors (e.g., paper manufacturing, 

printing and publishing) were not represented at the table. 

A few participants suggested that the scope should focus on priority material types (e.g., 

aluminum, cardboard, steel) rather than all forms of packaging.

Dedicated focus on recycling

Several participating stakeholders – largely from industry – raised concerns about the 

implicit assumption of recycling as the single waste management solution to be 

addressed. Some of those individuals advocated for a more holistic assessment of end 

use options, exploring how best to maximize the recovery of value (in financial and 

environmental terms) from the municipal solid waste stream. They preferred an 

expanded zone of inquiry that would have allowed an integrated waste management 
20

approach including time devoted to composting and waste-to-energy, determining the 

appropriate management strategy for each set of circumstances. 

Extended Producer Responsibility

Many participants would have preferred a narrower focus on those financing strategies 

they believed from the outset to be most promising, especially extended producer 

responsibility (EPR). The facilitators acknowledged at the project’s beginning that EPR 

was highly relevant to the dialogue but not the sole intended focus and not specified in 

the official written scope of inquiry. Several individuals from various sectors – including 

state and local government and environmental NGOs – would have preferred a more 

explicit, results-oriented focus on EPR. Based on these participants’ prior evaluations of 

many of the extant and potential approaches (in Europe, Canada, and – for other parts of 

the waste stream in the U.S. – they believed EPR to be the most promising strategy for 

remedying the current financial challenges confronting recycling. Many of those 

individuals hoped for and expected a more sustained focus on and deeper analysis of 

EPR.

Some participants, however, including most brand owner representatives, expressed 

strong discomfort with any explicit emphasis on EPR. A handful of stakeholders 

expressed the view that EPR was in fact too broad a subject given the need for 

meaningful and near-term action, and that a somewhat narrower but still reasonably 

holistic focus on sustainable waste management – i.e., end-of-life management of key 

materials – would be most productive. The chapter below on Financing Strategies 

provides more detail on the group’s deliberations and stakeholder perspectives regarding 

EPR and other strategic options. 

After early deliberations among participants, EPA confirmed the breadth and boundaries 

of the intended scope. 

Traits of an effective system

Participants discussed at length the characteristics and objectives of an effective recycling 

system for packaging and printed material. After significant deliberation, stakeholders 

jointly identified the following traits to guide the dialogue and to inform future efforts to 

improve the system. A successful system should:

1. Provide consistent and accurate consumer education that increases 

participation and drives quality results.

2. Provide wide access to recycling opportunities (including underserved and 

non-residential). 

3. Reflect lifecycle/system based thinking (from initial package and printed 

material design to end of life management) and take into account relevant 

environmental and public health benefits/impacts.
21

4. Foster a system-based approach that is flexible and consistent across 

jurisdictional boundaries.

5. Establish and meet clear performance measures. 

6. Produce marketable commodities and foster innovation that serves to improve 

quality and efficiency. 

7. Be economically self-sustaining, improve efficiency and enable cost control.

8. Incentivize all participants in the system to maximize efficiency and recovery 

for recycling.

9. Ensure feedback loops across the system (e.g. product design, waste 

collection, after market channels).

10. Ensure clear recognition and allocation of roles and responsibilities. 
22

III. Strategies for Financing Recycling

Introduction

The Financing Strategies workgroup was charged with:

1. Comparing a list of financing strategies identified by the plenary group with the 

traits of an effective system, also ideated by the group. The financing strategies 

were chosen for evaluation of their potential to achieve, or help achieve, 

sustainable financing for recycling of packaging and printed material at the 

municipal level.

2. Further defining those strategies and supplying examples to illustrate important 

variations of each for purposes of the dialogue. 

3. Listing the relative advantages and disadvantages of each based on input solicited 

from dialogue participants, and preparing balanced assessments of the strategies. 

The workgroup considered the list of possible financing strategies, adding basic 

information including a description, examples, funding and managing responsibilities. 

Working from this matrix of basic information, the larger participant group provided 

perspectives on the advantages and disadvantages of each strategy. Workgroup members 

used that compiled input to prepare an initial draft assessment of each strategy. Authors 

used criteria prepared by the workgroup, which was drawn from the participant group’s 

definition of sustainable financing and traits of an effective system, to assess each 

strategy. The assessments were reviewed and revised at the workgroup level, discussed 

during a plenary session, and revised again based on that discussion and subsequent 

written input.

Context and caveats 

• The assessments are not intended as deep analysis. They were prepared using 

participants’ volunteer efforts, limited time, and accordingly with a relatively 

preliminary review of the issues. While empirical data is cited in many instances, 

the assessments should be understood as the product of collaborative negotiation 

among stakeholders representing a diversity of perspectives, interests, sectors and 

disciplines. Also, while participants had multiple opportunities for providing 

written input, they only enjoyed one opportunity (at the fourth and final meeting) 

for in-person discussion of the assessments in draft form.

• Most of the strategies are not stand-alone approaches to sustainable financing; in 

many instances they would need to work in conjunction with other 

complementary strategies or with an optimized system.

• The overall approach of the exercise combined practical and aspirational analysis. 

While each assessment addresses issues of feasibility, participants were asked to 

focus mainly on a given strategy’s potential to fulfill the identified criteria if 

implemented rather than on the likelihood of implemented.
23

• The assessments are intended as multi-lateral, balanced evaluations of each 

strategy rather than as advocacy pieces. The array of perspectives among the 

participant group is represented within each assessment.

• It is recognized that each strategy if implemented does not operate in vacuum and 

would have effects on the existing system; however the analysis does not extend 

to anticipating those effects.

The following assessments reflect a range of views expressed by participants of the 

dialogue. For the most part, the review process resulted in responses to each criterion 

that incorporated the range of views expressed among the participant group; in a few 

instances a dual response format was used to accurately reflect divergent views.

The assessments are organized by major sources of funding. The first contain those 

which are primary funded by producer, including Full Cost Internalization, Partial Cost 

Internalization, and Eco-Fees. Strategies primarily funded by consumers follow, 

containing Advance Disposal Fees, and Deposits and Unclaimed Deposits. The third 

section contains assessments that are primarily funded by ratepayers and include Fees at 

the Time of Recycling, Subscription Service, and Pay-as-You-Throw. Those that are 

funded by taxpayers conclude the section, including Taxpayer-Funded, Tax Credits and 

other Financial Incentives, and Federal Funding for Recycling Infrastructure.

Those participants serving as contributing authors were asked to assess a given strategy’s 

potential to: achieve financial sustainability; positively affect the value chain and 

associated communication and action; enable efficiency and cost control; maximize 

efficiency, reach and scalability; and achieve satisfactory ongoing performance. Authors 

were also asked to provide perspectives on considerations of feasibility, degree of impact, 

and likely cost.
24

A. Producer-Funded Strategies

EPR Overview

The OECD defines extended producer responsibility (EPR) as an environmental policy 

approach in which a producer’s responsibility for a product is extended to the postconsumer stage of the product’s life cycle. An EPR policy is characterized by: (1) the 

shifting of responsibility (physically and/or economically; fully or partially) upstream 

toward the producer and away from municipalities; and (2) the provision of incentives to 

producers to take into account environmental considerations when designing their 

products. While other policy instruments tend to target a single point in the chain, EPR 

seeks to integrate signals related to the environmental characteristics of products and 

production processes throughout the product chain. [3]

EPR is sometimes referred to as “product stewardship;” however they can be 

differentiated in that EPR describes policy and product stewardship describes industry 

programs. Both EPR and product stewardship are used to address full life-cycle impacts 

of products, but practical emphasis has tended to focus on management of manufactured 

discards. 

Additional items to note regarding each of the three EPR financing systems described 

below: 

• “Recycling” (used repeatedly in the assessment criteria) means more than 

collection. It means processing collected material and using it to make 

new products, which are then purchased and used again. Financing

systems that only address collection, or that incentivize quantities 

collected without regard for whether the material is used to make new 

products or packaging, are unlikely to improve “real” recycling. 

• Attaining the highest impact within an EPR strategy hinges on the level of 

the performance standard set by government (reflected in the level of cost 

borne by the brand-owner and strength of that cost signal). A further factor 

is whether the brand-owner complies by providing its own environmental 

management (take-back and recycling system) or participates with other 

brand-owners through a consortium.

• Policies will need to include firm government oversight for ensuring 

accountability of brand-owners to achieve specified performance targets 

for the products and packaging that they specifically introduce into the 

market.

 [3] For the purposes of this exercise the Financing Strategies work group adopted a working understanding 

of the OECD definition as focusing on end of life to send design signals.
25

Cost Internalization 

An EPR system with cost internalization means that end-of-life environmental 

management costs are not charged to consumers in the form of a visible “fee.” Instead 

these costs are absorbed by the brand-owner, or passed onto consumers invisibly by being 

incorporated into the overall price of products and associated packaging. 

As with all EPR financing approaches, the producer’s environmental care costs can be 

assessed in various ways. They can be charged on a per-unit or a per-ton basis. The costs 

can be assessed on the units or tons introduced into the market, or the units or tons 

recovered through the program. And, in the case of packaging, costs can be assessed on 

the basis of the material type (paper, aluminum, steel, HDPE, PET, aseptics, etc.).

Examples of cost-internalization programs include: 

• Post-consumer Pharmaceutical Stewardship Association in British Columbia (no 

fee for take back to pharmacies)

• Call2Recycle in British Columbia (only free battery and cell phone collection 

programs in North America, covering all household batteries including alkalines).

• Fost Plus in Belgium. http://www.proeuropecongress.com/upload/William_Vermeir__sem.pdf

• ARA in Austria. http://www.proeuropecongress.com/upload/Christophe_Scharff.pdf

• Voluntary e-waste programs. Many electronics manufacturers have set up 

voluntary take back programs in states that do not have an EPR law for 

electronics. The programs vary, but often they require the consumer to either 

mail the item back to the manufacturer or drop it off with a specific recycler or 

retailer that the manufacturer has an agreement with. A list of these programs is 

available at http://www.electronicstakeback.com/how-to-recycleelectronics/manufacturer-takeback-programs

• Estee Lauder's cosmetics packaging take-back program.

• Mandatory e-waste programs. Generally the approach in place in the take back 

programs in the 23 states with producer responsibility e-waste laws (California 

has a government-managed, Advanced Recycling Fee). This link has information 

and links to all 24 of the state e-waste programs: 

http://www.electronicstakeback.com/promote-good-laws/state-legislation/.

1) Financial sustainability

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources 

Collection costs are covered as long as the stewarded products and associated 

packaging are sold. 
26

Potential to make a significant contribution to a long-term solution

This strategy does contribute to a long-term solution, however, issues associated 

with “free riders” must be addressed. Experience in the EU and Canada shows 

that there are still issues in the marketplace of packaging with no clear owners, 

thus shifting costs to identified producers.

Potential to avoid escheats /assure that funds are used for the intended purpose

The strategy avoids government escheats because government is not involved in the 

financial operation of programs. 

2) Value chain, communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

Cost internalization provides feedback on product design because producers control costs 

and operational aspects of the program. For example, costly-to-recycle and disposable 

packaging will have immediate feedback to packaging designers if producers see high 

costs of collecting and recycling or disposing of it. 

The strength of these feedback signals is largely dependent on the level of cost incurred 

for environmental management. If costs are spread thinly across a large pool of 

participants and are not specific to materials and environmental impact – or if the 

environmental management system is not held to high performance standards – the cost 

signal will be diluted and unlikely to influence behavior.

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

PERSPECTIVE 1: Cost internalization does not incentivize consumers; it hides the cost 

of EPR from the consumer. Consumers make no connection between the cost of the 

product and its relative sustainability,8 and less connection between the cost and its 

partial funding of the product end-of-life disposal.9 

PERSPECTIVE 2: While cost internalization may hide environmental care costs from 

the consumer, most other components that make up a product’s cost are hidden. In so 

doing we forgo many other opportunities to incentivize and educate, such as elucidating a 

bloated marketing budget of Company A over B; informing the buyer of the exorbitant 

 8 Andrew Binkle, “Designing Efficient Waste Systems: A Comparative Assessment of Extended Producer 

Responsibility Policy Instrument”, Presented at the Wealth Without Waste Conference, February 2009, 

Section 5.3.2.3. https://www.rco.on.ca/uploads/File/wealthwithoutwaste/Binkley_EPR_ppr.pdf 9 Andrew Green and Michael Trebilcock, “The Eco-Fee Imbroglio: Lessons from Ontario’s Troubled 

Experiment in Charging for Waste Management”, CD Howe Institute Commentary, No. 316, December 

2010, pages 15-16. http://www.cdhowe.org/pdf/Commentary_316.pdf
27

retirement package in Company C versus Company D; or spotlighting the great deal on 

raw materials Company E got over Company F. In other words, many argue, 

environmental cost should no more be called out in the product price than all the other 

costs of doing business that companies must minimize so as to maximize profit. 

Communication with consumers is important for the success of cost-internalized EPR 

programs. Producers should, at the outset of new EPR programs and for some time 

afterward, communicate to consumers that the advertised and posted shelf price includes 

a cost for the proper recycling and end-of-life management of the product.10 

Potential to influence consumer behavior in needed ways

The potential is mixed. On the one hand, a complete “cost internalized” system could 

potentially lead to high recycled-material content in packaging, and for greater 

opportunities to educate consumers about the benefits of such products. On the other 

hand, under the same scenario there is less need to influence consumers to specifically 

buy recycled-content packaging, as it becomes the norm, not the exception. 

Potential to improve recycling rates in the U.S.

Cost internalization is not a strategy per se that drives recycling rates. It may be part of a 

larger system that contributes to increased recycling rates. Cost internalization may be an 

incentive to reduce costs by increasing recyclability of packaging and thus lead to 

increased recycling rates. However, several other factors dictate packaging composition, 

including food safety, package safety, durability, and shelf life.

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

Price signals that must be borne can potentially lead to further packaging design changes. 

Of course, such changes are mitigated by consumer demand, product safety, etc. 

Potential to foster innovation in processing technology

When producers are responsible for the cost of the recycling of their packaging, 

there will be strong motivation to ensure that processing technologies are efficient 

and effective. Producers will have strong direct incentive to invest in innovation, 

including processing technology, to ensure that their packaging can be recycled. 

EPR with cost internalization could also open the door to competition between 

brand-owners, allowing companies to compete with each other by reducing their 

environmental management costs. One key to innovation is the opportunity for 

competitive advantage through innovation. 

 10 Duncan Bury, “Policy Forum: Should Extended Producer Responsibility Programs Use Eco-FeeIncluded Pricing? “ Canadian Tax Journal, Vol 58, No. 4, 2010, p. 944.
28

Potential to establish a level playing field between recyclables and virgin materials / 

Encourage markets for recycled materials

Cost-internalization has the potential to assist in leveling the playing field, but in and of 

itself, is unlikely to completely level the playing field. For example, the strategy can be 

designed to assist by providing incentives for producers to use or increase recycled 

content in order to create a market for their packaging. Furthermore, unlike other 

strategies, cost-internalization is not inconsistent with complementary policies that level 

the playing field between recycled and virgin materials.

When cost-internalization is part of a robust system that increases recycling rates, 

increased collection allows for greater recycled material supply. Studies show that once a 

stable supply is established, the market can then respond with innovative ideas for use of 

the supply, thus encouraging a market.

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

This strategy allows for such recognition and allocation, and this is an element of the 

policy design, as well as the inherent incentives to improve upstream design and 

downstream effectiveness and efficiencies, including market development. 

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run 

PERSPECTIVE 1: Cost internalization has high potential to operate efficiently and 

reduce total system costs because producers are in the driver’s seat. (Economic drivers 

must be coupled with producers being fully accountable for achieving the prescribed 

environmental outcomes.) By internalizing currently externalized environmental care 

costs of collection for recycling, cost-internalized EPR removes an important market 

distortion.11 Evidence suggests that diversified systems for different packaging streams -

- such as curbside, deposit-refund, return to retail -- can reduce system costs by targeting 

specific consumer demographics and allowing optimization of different collection 

modalities.12

 11 Andrew Green and Michael Trebilcock, “The Eco-Fee Imbroglio: Lessons from Ontario’s Troubled 

Experiment in Charging for Waste Management”, CD Howe Institute Commentary, No. 316, December 

2010. http://www.cdhowe.org/pdf/Commentary_316.pdf 12 Hogg, Fletcher, Elliott and von Eye, “Have We Got the Bottle? Implementing a Deposit Refund Scheme 

in the UK”, http://www.cpre.org.uk/filegrab/Havewegotthebottle.pdf?ref=4438 (September 2010)

The report states that the argument that deposit-refund systems are duplicative and increase system costs is 

“pure speculation based on the unlikely scenario in which there is no effect on the logistics of the preexisting system.” In fact, the findings suggest that if recovery of beverage containers through a deposit 

return program is very high, then there is limited need to include bottles and cans in a curbside program and 

the curbside system can concentrate on optimizing the logistics of collecting the remaining materials such 

as newspaper, phone books, paper, cardboard, and other household-generated container packaging.
29

PERSPECTIVE 2: Cost internalization could potentially increase total system costs by 

placing artificial inflationary pressure on product costs, and thus distorting the market. 

Additionally, experience from the European Union shows that system costs are not 

reduced because the same infrastructure is needed to continue providing consistent levels 

of service.13

Potential to improve the efficiency of the recycling system

While cost internalization does not directly impact recycling system efficiency, it could 

be part of an effective system that drives overall recycling rates, thus improving system 

efficiency with greater throughput.

Potential for cost control 

Producers will be highly motivated to ensure services are not only effective at achieving 

the required standards, but are also delivered at good value. This can help drive cost 

control at other points in the value chain, including collection and processing costs as 

those sectors compete to get the business of the producers.

4) Consistency, reach and scalability

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

Cost internalization can be implemented state-by-state or nationally, although the latter is 

unlikely.

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

This strategy has promising potential to accommodate the broad range of consumer 

settings. With the free-market emphasis of cost-internalization systems, the creativity and 

diversity of the market is brought to bear. There will likely be many service options 

created and tested in the marketplace as producers attempt to achieve efficiencies and 

cost-effectiveness.

 13 Jane Bickerstaff, INCPEN, in response to a question raised after her presentation to the group, said 

“Municipalities should in theory be able to reduce charges to the public if they either have less waste to 

collect or are subsidized by the public sector for a portion of waste. In practice though the costs of waste 

collection are hardly affected because the vehicles and labor have to be provided even if one dustbin a 

road is completely empty. Disposal to landfill costs are affected a little but packaging is a small percent 

(no more than 5%) of waste sent to landfill and, thanks to companies’ – like yours – lightweighting 

programmes, the amount of packaging per pack is being continuously reduced.” (Emphasis added.)
30

5) Ongoing performance

Potential for measurable performance data

An EPR system, regardless of cost internalization, can provide measurable performance 

data because it needs to be reported and assessed in order to demonstrate compliance. 

While this information collection adds additional costs to the producer that must be 

internalized, it provides information about a product’s life cycle allowing producers to 

make design and system adjustments.

Potential to produce high-quality commodities

EPR systems have drivers that can incent production of high-quality commodities. 

The environmental performance of the EPR program is largely determined by 

clear standards set and enforced by government. The concept of cost 

internalization, without other related policy factors, does not automatically yield 

high-quality commodities. However, when set up properly, the market will help 

drive the demand for high-quality commodities. When producers are in the 

driver’s seat to establish take-back programs, a natural gradation of service-levels 

will emerge that rewards higher-quality materials.

Commodity quality is also determined by the producer to meet market demand. In 

addition, consumer demand for different product packaging can fuel market innovations.

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

Due to factors noted above, there are economic and other drivers to allow and encourage 

the improvement of recycling system technologies. EPR systems based on individual 

rather than collective producer responsibility (sometimes called Individual Producer 

Responsibility) may have additional drivers for brand-owners to compete by investing in 

superior recycling system technologies. Flexibility is central to cost-internalization and 

successful EPR.

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials 

EPR is relatively new to the U.S. both generally and as a financing system for packaging. 

As such, concerted opposition can be expected from a variety of parties, while others will 

provide concerted support.
31

Political feasibility

The political feasibility of cost-internalization as a financing strategy remains to 

be seen. In the U.S., EPR legislation is being adopted for a variety of hazardous 

and other discrete products, while proposals for its application to packaging have 

not yet been adopted but continue to emerge. EPR for packaging faces the 

challenge of being perceived as a tax increase. However, it is less likely that 

producer-managed environmental care costs would be perceived as a tax under 

cost internalization than they would with visible fees. 

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

The strategy avoids any complexities for retailers and consumers, but does create 

complexities that are currently non-existent for packaging producers in the U.S. 

B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

The strategy has the potential to highly impact current challenges, including lack 

of collection infrastructure, ineffective or inefficient collection infrastructure, lack 

of options for diverse generators, lack of funds for MRF improvements, lack of 

access to major media messaging, etc. 

C) Characterization of likely cost in relative, qualitative or quantitative terms

As long as there are clear performance standards that are set and enforced by 

government on all obligated brand-owners, these questions are best addressed by brand 

owners themselves.
32

Partial Cost Internalization

Partial cost internalization differs from full cost-internalization as described above in that 

a portion of the environmental care costs are paid by the brand-owner or retailer, or 

passed onto consumers by being incorporated into the overall price of products and 

associated packaging. The balance of the costs is not internalized and remains with the 

local government or its ratepayers/taxpayers.

Two examples include the Ontario Blue Box System, Stewardship Ontario,

http://www.calpsc.org/products/events/docs/2010-11-17_Derek-Stephenson.pdf and 

Maine E-Waste. Both are mandatory programs.

The description below elucidates ways in which partial cost internalization varies from 

full cost internalization along the key elements of the assessment.

1) Financial sustainability

Under a partial cost internalization system financial sustainability is less clear 

than under full cost internalization. It would depend on how and by whom the 

remaining system costs are funded. If local government remains as the other 

funder, the same limitations of the current system apply but to a lesser degree as 

the government obligation is lower. Escheats can be avoided if the government is 

not holding the funds for the other portion of the program. These funds can be 

held by other entities on behalf of the government if the government is involved. 

2) Value chain communication and action

A partial cost internalization system would have the same type of impacts on the value 

chain as full cost internalization but to a lesser degree due to the fact that the producers 

are not paying all of the costs. One area where there are significant differences is in the 

clear roles and responsibilities. Having two or more entities involved in funding a waste 

management system necessarily complicates the ability to clearly define roles and 

responsibilities. 

3) Efficiency and cost control

Under a partial cost internalization system, efficiency and cost control potential is not as 

great. Since there will be at least two organizations involved in sharing total system 

costs, there will be additional coordination costs and likely more redundancies introduced 

into the system than currently exist. 

4) Consistency, reach and scalability

With partial cost internalization, the full breadth of service can be achieved but 

the ability to implement consistent programs may be limited. There are a 

multitude of existing funding systems and if only a portion of those costs would 

be transferred, it is reasonable to assume that the remaining system costs would 

continue to be funded as they are now. 
33

5) Ongoing performance 

It is anticipated that ongoing performance under partial cost internalization would 

be largely the same as with full cost-internalization, with the exception of the 

degree of flexibility. With two or more entities involved in managing the 

program, the flexibility to respond to improvements in recycling system 

technology will likely be reduced. 

Overarching considerations 

 

Partial cost internalization will have the same political challenges as full cost 

internalization, will generate additional complexities due to the need to coordinate with at 

least one additional organization and is likely to have a lesser impact on the problem 

because only a portion of the system costs would be assumed by producers. The existing 

financial limitations would remain for the balance of the system costs.
34

EPR Eco-Fees

Eco-fees are charges imposed to capture the end-of-life management costs associated 

with a product or material. All manufacturers pay the same fee for the same products.

Eco-fees are generally set by industry but may be specified in legislation such as in 

Oregon’s paint law.

Eco-fees are paid on a per-unit basis and frequently managed by a private third party 

organization (typically, an industry-funded non-profit) that handles collection and 

recycling responsibilities for a group of brand owners. The eco-fee may be either added 

into the price of the product (invisible to the consumer) or passed down the value chain as 

a visible fee to the consumer. Systems where the eco-fee is visible to the consumer have 

some similarities to an advanced disposal fee and the characteristics described in that 

paper; however eco-fees are managed by industry rather than by government. Systems 

that do not visibly pass the eco-fee down the value chain have some characteristics of 

cost internalization systems; however the funds and responsibilities for managing the 

program are entrusted to third party organizations rather than undertaken by individual 

brand owners.

In some cases, eco-fees may not cover the 

entire costs associated with collection and 

processing of the product or material. In 

those cases, government may provide 

additional funding. 

One example of an eco-fee system is 

Oregon’s Paint Stewardship law. An Ecofee is paid by the manufacturer to Paint 

Care, a non-profit entity, for every container 

of paint, stain and varnish sold in Oregon. 

This cost is passed down the distribution 

chain and ultimately paid by the consumer. 

Paint Care sets up agreements with local governments, retailers, and others to be 

collection points. Paint Care contracts with transporters and processors to pick up and 

manage the material. The amount of the Eco-fee is in the manufacturer’s plan and is 

subject to approval by the Department. The following table shows the Eco-fees that were 

approved in Oregon.

Oregon Eco fee -

1/2 pint or less $0.00 

>1/2 pint to 1quart $0.35 

> 1 quart to 1 gallon $0.75 

>1 gallon to 5 gallon $1.60 

Other examples of eco-fee systems include:

• Encorp Pacific in British Columbia (beverage containers and electronics) 
35

• Tire Stewardship BC 

• BC Used Oil Management 

• Electronics Stewardship Association of BC 

• Paint Care in OR, CA and several Canadian provinces 

• Carpet America Recovery Effort (CARE) in CA

1) Financial sustainability

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources 

Eco-fees have been successfully used for various products and packaging. The 

amount of funds generated is relative to the amount of the product/packaging 

being sold, therefore, as the amount available for recycling increases or decreases 

the funds generated changes accordingly. The fees can be adjusted if the funds 

being generated are insufficient or excessive, except when the fee amounts are 

established by government legislation.

Potential to make a significant contribution to a long-term solution

As mentioned above, Eco-fees have been successfully used for various products 

and packaging.

Potential to avoid escheats /assure that funds are used for the intended purpose

If the fee is set at an appropriate level there should not be an accumulation of funds. The 

program can be set up so that the third party organization is audited and accountable.

2) Value chain, communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

Yes, although the feedback is a more limited than other forms of EPR. Producers will 

want the fees to be as low as possible, which will give them an incentive to use packaging 

with lower lifecycle costs. However, because the fee is set regardless of brand, there is 

less of an incentive for individual producers to make changes.

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

The fee may be visible to the consumer or incorporated into the cost of the product. Fees 

could be set based on environmental attributes of specific materials and therefore, as long 

as various options were available, consumers could be incented to select packaging with 

higher environmental performance. However since the fee (by material) would be the 
36

same regardless of brand, consumers would not have an incentive to select a brand whose 

packaging was more environmentally friendly by design. If eco-fees were set at the same 

rate for all materials, little if any incentive would occur.

Potential to influence consumer behavior in needed ways

If the consumer understands that they paid for recycling when they bought the product, 

they may be more likely to recycle the packaging and if the fees are based on 

environmental performance of the material, they would be incentivized to choose the 

packaging with the least environmental impact. 

Potential to improve recycling rates in the U.S.

This strategy can help boost recycling rates, especially if the funds are used for 

education and infrastructure in addition to recycling. An advantage to this type of system 

is that it would be highly standardized so there would be less confusion by the public as 

to what can or can’t be recycled, and that clarity should benefit recycling rates.

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

If fees are set based on environmental attributes of each material, then it would incent 

innovations towards packaging with lower environmental impacts.

Potential to foster innovation in processing technology

Because the third party organization would be contracting for the processing, they would 

look for the most efficient way to process large quantities of materials.

Potential to establish a level playing field between recyclables and virgin materials / 

Encourage markets for recycled materials

Because producers will want to keep the fees low and are managing the system, they will 

have an incentive to use recycled content in their products to provide a market for the 

material collected.

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

An Eco-fee approach does envision different roles and responsibilities for manufacturers, 

retailers, and government agencies; however, they would need to be clearly defined either 

in an MOU or in legislation.
37

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run 

Because the manufacturers have a vested interest in keeping the fees low, and due to their 

significant role in controlling the system, they have an interest in keeping it as efficient as 

possible. 

Potential to improve the efficiency of the recycling system

As mentioned above, manufacturers have an incentive to keep the system as efficient as 

possible.

Potential for cost control 

As explained above there is some potential for cost control. However, since there is no 

competition (the fee is the same regardless of brand) there is not as much of an incentive 

to reduce costs as there would be in an Individual Producer Responsibility (IPR) system.

4) Consistency, reach and scalability

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

Fees would need to be set on a statewide or national basis to achieve consistency. If one 

third-party organization served all of the states with legislation, or the whole United 

States, a high degree of consistency would be achieved.

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

Since fees are based on sales, all consumers would be included no matter where they 

reside.

5) Ongoing performance

Potential for measurable performance data

Performance data would be relatively easy to track since the funds collected would be 

based on the amount sold, and presumably funds paid to the collectors, transporters, and 

processors would be based on volume.
38

Potential to produce high-quality commodities

If fees are easily adjustable, EPR systems have drivers that can incent production of highquality commodities which will have greater value and thereby reduce costs to producers. 

However, quality of the commodities will also be influenced by other factors, such as the 

environmental performance required and enforced by government, and the quality of the 

collection and processing systems utilized.

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

If the fees can be adjusted as conditions change and are not established in legislation by 

the government, they will be very flexible.

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials 

Support for this strategy is closely tied to how it is implemented. Consumers will need to 

be educated on the system. If the fee is visible to the consumer and is placed on a wide 

variety of packaging, there is likely to be objection by a wide variety of parties. 

Opposition or support from retailers would depend on how the system is implemented, 

especially if visible fees are passed all the way through the value chain. If the retailers 

are required to add various visible fees to different products they would object. 

Political feasibility

Eco-fees are sometimes perceived as a tax which can make them difficult to legislate. If 

the eco-fees are applied visibly at the point of retail, political feasibility could become a 

significant challenge.

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

Complexity depends on the specifics of the system. A system where the fees are paid by 

manufacturers to the third party organization and the cost is incorporated into the price 

when the product is sold to distributors would be very simple. However if the fees are 

visible down the chain to the consumer it would be much more complex. Presumably 

there would be different fees for different types and sizes of packaging which would also 

add to the complexity.
39

B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

Eco-fees could have a high impact and be a significant improvement over the status quo. 

They would provide the funds needed to overcome the present obstacles and could 

provide consistent education to consumers.

C) Characterization of likely cost in relative, qualitative or quantitative terms

The cost of the system will need to be addressed by the brand owners so that the fees are 

set at a level that will fully fund the system. Existing programs for packaging in Canada 

and Europe could provide additional information on costs.
40

B. Consumer-Funded Strategies 

Product-Based Advance Disposal Fees 

Advance disposal fees (ADFs) are fees added as a separate line item to the price of the 

product at point of sale. These fees are notably visible so the consumer knows that a 

designated cost is going towards end-of-life recovery. They are funded by consumers 

and managed either by retailers or the government. They are distinguished from eco-fees 

in three ways. Eco-fees are often managed by a non-profit organization funded by the 

producers of the materials, eco-fees can include factors other than end of life disposal 

costs, and eco-fees can be invisible to the consumer. 

This assessment pertains specifically to the application of ADFs to consumer packaging 

and does not assess the attributes of ADFs to address non-packaging products, such as 

those that are hazardous or hard to handle.

Research done in October 2010 by Skumatz Economic Research Associates, Inc., for 

StopWaste.Org on ADFs found a few examples in the U.S. and other international

examples for non-packaging products or select types of packaging. Examples include 

traditional ADFs, such as San Francisco’s Litter Abatement Fee, California’s Tire fee and 

E-waste law (passed in 2004), and fees on single-use bags in Washington, D.C., Ireland, 

and Italy. No current examples are known that cover a wide range of packaging products 

and materials, though Florida passed (and then allowed to sunset) an advance disposal fee 

on packaging. 

Florida’s ADF initially took effect October 1, 1992, as a deposit of a penny per container 

on all containers with recycling rates less than 50%. In 1993 the program was modified to 

assess the penny fee on those cans, bottles, jars, and beverage containers from 5 ounces to 

one gallon which had not achieved recycling rates greater than 50% in Florida. 

Exemptions were provided to companies that met recycling and recycled content goals. 

The ADF was structured to phase out for containers that achieved the targeted recycling 

rates, and to increase to $.02 for those that did not achieve recycling goals after a year. 

The program was estimated to generate $65 million for the state, but ultimately did little 

to solve litter/waste problems, as 99% of all beer and soft drink containers were exempt 

from the ADF. The ADF was allowed to sunset in 1995.

ADFs are not necessarily recycling fees: in fact recycling doesn’t show up in the name of 

the strategy. ADFs can be used to finance the proper disposal, rather than recycling, of 

some hazardous materials. In California, the fees charged at the point of sale for covered 

electronic devices are called Advanced Recovery Fees or ARFs. 

Newer versions of container “deposit” legislation do not refund deposits at all but the 

“advance fees” are used to expand or educate consumers about recycling options already 

available to them. 
41

1) Financial sustainability

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources

Advance Disposal Fees (ADFs) can provide secure and stable financial resources 

for the products covered by the fee, if properly managed and if the funds collected 

are used solely for the intended purpose. However, ADFs deposited in 

government accounts may be at risk to be appropriated for other purposes. ADFs 

on specific packaging would likely not generate sufficient resources to fund 

recycling infrastructure for other, non-covered products or packaging. 

ADFs at the retail level, separately charged to consumers for a broad range of 

packaging, are unknown. Fees are most often applied to specific product 

categories rather than broad categories like packaging, aside from a limited 

number of specific cases such as single-use shopping bags. 

Potential to make a significant contribution to a long-term solution

The potential of packaging ADF to contribute to a long-term solution is dependent 

on several factors. For instance, if fees are practical, garner the political will to 

apply at the point of retail to be paid by consumers, and are set at a sufficient level 

to cover the costs of: i) managing the materials from collection to recycling; ii) 

creating collection and recycling infrastructure where needed; and, iii) 

administering the program, then this type of financing could serve as a financial 

base for a recycling system if fees are set for all materials collected in collection 

programs. 

Potential to avoid the misappropriation of funds / ensure that funds are used for the 

intended purpose

State and local government managed funds are vulnerable to having funds diverted for 

other purposes. There are several historical examples of this occurring. 

2) Value chain communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

While ADFs provide feedback to various points in the value chain; the level of feedback 

varies based on position in the chain. The most direct feedback is communicated to 

consumers, who pay the fees at retail and might respond to the price signals in their 

purchasing decisions. 

Looking upstream, brand owners may be motivated to make packaging changes in order 

to avoid the ADF since it may impact sales, but in the event this is not possible, there is 
42

no additional incentive. This upstream feedback is somewhat indirect and further limited, 

given that ADFs specifically cover the costs for recycling or disposal (rather than full 

life-cycle costs) and are typically averaged across diverse materials. Assessing fees 

across a broad category of materials reduces direct feedback to manufacturers, so there is 

limited opportunity to compete within specific segments. 

Fees must be set high enough to affect consumer behavior in order to achieve the desired 

changes. The level of fee necessary will vary by product category and demand elasticity.

Fees also provide immediate feedback to producers on consumer willingness to make 

financial trade-offs for considerations like single-serve and other convenience packaging. 

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

ADFs for packaging can provide transparent cost signals to consumers, but also can result 

in consumer resistance due to the perception of increased costs or “taxes” on groceries 

and other products. 

A potential benefit of fees is that they convey the message to the consumer that some 

products/packaging have higher end-of-life handling costs than others. Generally 

speaking, the ability of the fees to influence behavior is completely dependent on the 

criteria used to set the fees and whether the fees are assessed on each packaging type or 

on a broad range of materials. If cost of handling the materials is the sole criterion, the 

consumer impact would be marginal at best. 

Potential to influence consumer behavior in needed ways

ADFs’ influence on consumer behavior is almost completely dependent on the costs to be 

included in the fees and consumer response to the fees. Consumers would likely choose 

products with the lower fee, or no fee at all, or they may reduce use of the product, 

assuming they are willing to accept a fee-based system at all and assuming high demand 

elasticity. ADFs may incent consumers at point of purchase, but not necessarily extend to 

incenting behavior to recycle at end of life.

Potential to improve recycling rates in the U.S.

Improvement in recycling rates depends largely on the extent of recycling infrastructure 

that is in place to make it convenient for consumers to recycle their packaging rather than 

dispose of it. Fees can help cover some or all of the recycling and infrastructure costs for 

covered products but charging a fee cannot guarantee that materials will be recycled. 

 

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

ADFs are typically based on end of life costs of the existing system and types of 

packaging used so there is little connection to packaging design. If the fees are based on 
43

factors other than end of life costs, (lifecycle costs, recyclability, etc), there is potential 

for the fees to impact packaging design. However, the differences in recycling programs 

across the country and the number of stakeholders involved would make this a difficult 

strategy to implement successfully, and hence it would be unlikely to incentivize 

packaging innovation.

Potential to foster innovation in processing technology 

Assuming fees are based on the cost of disposal/recycling, changes in processing 

technology may impact the costs of disposal/recycling and therefore fees could be 

modified to reflect the change in technology. 

Potential to establish a level playing field between recyclables and virgin materials / 

encourage markets for recycled materials 

The only way ADFs would contribute to leveling the playing field would be if the value 

of the virgin material tax credits is somehow offset in the fee setting structure or if 

recycled content packaging receives a credit on the fees. These scenarios have not been 

part of any fee structure to date. 

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain 

ADFs do not allocate roles across the entire value chain as the manufacturers and brand 

owners typically do not have a role in the payment of the ADF. Retailers collect the fee 

on product/packaging sales, consumers pay the fee, the government collects the money 

and finances the program. The parties that have the greatest role in the production of the 

packaging – manufacturers and brand owners, have only an indirect role – as their 

product sales would be impacted by the fees. 

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run

 

Under an ADF scheme, retailers are obligated with a new task of collecting and 

transferring the fees to the appropriate agency that oversees the program and manages the 

finances. Both of these would be new functions and would increase costs to the obligated 

parties. 

Potential to improve the efficiency of the recycling system

The strategy has little influence on recycling efficiencies. Fees would likely be based on 

current system costs rather than an optimized system. Current efficiencies will only be 

improved if fees are set to cover the expansion of recycling infrastructure into needed 

areas and if there is a standard for recycling efficiency that can be used as a benchmark. 
44

The strategy adds work to the existing actors (government and consumers) and brings a 

new actor (retailers) into the equation. 

Potential for cost control

There is little incentive for cost control in an ADF system, other than that provided by the 

public’s response to the fees. Fees can be set to cover whatever costs are incurred, 

though they must be reasonable and justified in order to gain public acceptance. 

Theoretically, fees have the potential to drive packaging choice and design but in 

instances where lowest cost packaging is being used, there would be no other cost 

controls available under an ADF structure. 

4) Consistency, reach and scalability

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

Fees could be set at the state level which would be applicable to all cities and counties 

within the state. The fees would not accurately reflect the costs to dispose of or recycle 

that material statewide as costs would vary due to differences in collection costs and 

recycling infrastructure, so they would have to be set to reflect average costs. While this 

is possible, implementing such schemes in a consistent manner through multiple state 

laws or national legislation is unlikely. 

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities)

Fees would be collected at the retail level so they could be applied to all consumers. 

However, it is not clear how they would help provide collection for recycling at all 

locations.

5) Ongoing performance

Potential for measurable performance data 

ADFs can be tracked by requiring reporting from the businesses responsible for 

collecting the fees but this will only show the level of sales activity for the product. Data 

on recycling rates or other desired outcomes would not be measured via ADFs.

Potential to produce high-quality commodities 

In order to incentivize high-quality commodities, ADFs would have to take into account 

several factors, including lifecycle costs of the materials in the commodities and the 

associated packaging, costs to handle and recycle the materials, and recycling markets 

and infrastructure in place in any given area.
45

Potential for sufficient flexibility to allow for improvement of recycling system 

technology 

Historically ADFs have not been assessed to improve recycling system technology or 

efficiency. Theoretically it would be possible if fees were adjusted to reflect both the 

level of recycling technology in a given area and the costs to change the system, and if 

the funds were not diverted for other purposes. However, such a scenario is unlikely.

6. Overarching considerations

A) Feasibility (degree of difficulty to achieve)

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials

ADFs are likely to be opposed by a variety of groups, including consumers, retailers, 

consumer/tax groups and politicians. Industry and other stakeholder groups at various 

times have portrayed ADFs as a “tax” on products subject to the fee, and as a means for 

government to collect taxes for uses other than those stated. 

Political feasibility 

Based on the potential diversity of opposition to the strategy and the complexity of 

attempting to collect fees across such a broad category as packaging, implementation 

may not be feasible. ADFs may be more appropriately placed on specific products, such 

as tires or hazardous materials, than on widely used packaging materials like corrugated 

cardboard.

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

ADFs will add complexity for retailers, governments and consumers. Governments will 

need to establish bureaucracies for collecting and managing funds, as well as 

implementing programs. Retailers will have to change their accounting and point of sale 

systems to track and transmit the fees, as well as train checker staff (with low experience 

and high turnover) to respond to consumer inquiries. Consumers will have to learn and 

understand the new system. 

B) Degree of impact (high, medium, or low) on the problem on present challenges 

with financing of recycling of municipal solid waste

The impact would be low since fees would only be applicable to a small portion of the 

overall municipal waste stream. It would be an improvement over the status quo in that a 

portion of the waste steam would receive funding from the fees. 
46

C) Characterization of likely cost in relative, qualitative or quantitative terms.

According to a recent report by Skumatz Economic Research Associates, Inc. prepared 

for StopWaste.Org, the cost of implementing an ADF system in Alameda County 

(population 1.5 million) for packaging materials would be between $500,000 and $1 

million.14

 14 Lisa Skumatz and Heidi Sanborn. “Advance Disposal Fee (ADF) Options Research”, Alameda County, 

StopWaste.org, October,2010.

http://www.stopwaste.org/docs/adf_draft_report_oct_26.pdf
47

Deposits and Unclaimed Deposits

Container deposit laws (also known as Bottle Bills) require a minimum refundable 

deposit on containers (usually beer, soft drink and other beverage containers) in order to 

ensure a high rate of recycling or reuse. The deposit-refund system was originally created 

by the beverage industry as a means of guaranteeing the return of their glass bottles to be 

washed, refilled and resold. Litter reduction has also been a historical driver for some 

deposit laws. 

In most deposit jurisdictions, when a retailer buys beverages from a distributor, a deposit 

is paid to the distributor for each can or bottle purchased. The consumer pays the deposit 

to the retailer when buying the beverage. When the consumer returns the empty beverage 

container to the retail store, to a redemption center, or to a reverse vending machine, the 

deposit is refunded. The retailer recoups the deposit from the distributor, plus an 

additional handling fee in most U.S. states. The handling fee, which ranges from 1-4 

cents, helps cover the cost of handling the containers. 

Today, ten states15 and eleven Canadian provinces have a deposit law requiring 

refundable deposits on certain beverage containers. Although bottle bills meet with 

opposition from many members of the beverage and grocery industry, several states and 

provinces have expanded their laws to cover beverages such as juice and sports drinks, 

teas and bottled water—beverages that were less widely sold when most bottle bills were 

passed.

The costs to distributors and bottlers can be partially offset by the sale of scrap cans and 

bottles and by short-term investments made on the deposits that are collected from 

retailers. 

 15 The states are Oregon, Vermont, New York, Michigan, Connecticut, Iowa, Massachusetts, Maine, 

California, and Hawaii. Delaware's law was repealed in 2011.
48

What are “unclaimed deposits”? 

In ten U.S. States, beverage distributors and retailers are required by law to collect small 

deposits (usually a nickel) on certain packaged beverages—typically carbonated soft 

drinks and beer.16 When the consumer returns these beverage containers to a retailer or 

redemption center, the deposits are returned. When a consumer chooses not to return a 

deposit container, the deposit money is considered “unredeemed.” Other terms are 

“abandoned” and “unclaimed.” 

The exact amount of unclaimed deposits is not known precisely in all states, but can 

reasonably be expected to amount to millions of dollars a year, based on examples where 

data is available (see below). In the states where the deposit is 5 cents, 15 to 33 percent of 

beverage containers sold are not returned for their refund value. Since all of the deposit 

states also have municipal recycling programs, some of the unredeemed containers are 

recycled either through curbside programs or drop-off sites. In addition, some of the 

redeemed containers come from outside the deposit state, so the exact share of deposit 

state containers that are redeemed for refund is not known.

Redemption rates vary widely depending on a variety of factors, but they are primarily a 

function of the deposit amount. A higher deposit results in a higher return rate and fewer 

unclaimed deposits. In Michigan, the only state with a dime deposit, only 3 percent of 

containers sold are not redeemed. In California, where the deposit ranges from 5 to 10 

cents, approximately 20% of the containers were not redeemed in 2010. 

Who keeps the unclaimed deposits? 

All these unclaimed deposits remain the property of the distributors and bottlers in three 

states (Oregon, Vermont, and Iowa), while a portion of unclaimed deposits remains with 

distributors and bottlers in Maine and New York. Currently Connecticut, Massachusetts, 

and Michigan collect 100% of the unclaimed deposits, New York collects 80% of 

unclaimed deposits, and Maine collects a portion, although the mechanism for retaining 

these deposits varies. In California and Hawaii, the state collects the deposits from 

distributors when the beverages are sold to retailers. The bottler or distributor pays the 

deposit directly into a state-managed fund and collects the deposit from the retailer. The 

retailer then collects the deposit from the consumer. Any unclaimed deposits simply 

remain within this state-managed fund and are used to administer the deposit system.

In Michigan and Massachusetts, the courts have ruled that because these unclaimed 

deposits are "abandoned" by the public, they rightfully belong to the state, and they are 

used in some cases to fund environmental programs in those states. In Massachusetts, 

distributors and bottlers are required to turn over all unclaimed deposits to the state, and 

the revenue becomes part of the state’s General Fund. The unclaimed deposits are said to 

“escheat” to the state. Michigan escheats 75% of unclaimed deposits, and redistributes 

 16 Two states require deposits on carbonated beverages and beer only. Eight states (Oregon, Maine, 

California, Iowa, New York, Connecticut, Vermont, and Hawaii) require deposits on one or more other 

types of beverages in addition to beer and soft drinks.
49

the remaining 25% to retailers as a way to offset their handling costs. Distributors retain 

unclaimed deposits in three states – Oregon, Vermont, and Iowa. In 2008/09, abandoned 

deposits amounted to $33 million in Massachusetts, $12.5 million in Michigan, and New 

York’s 80% share was over $120 million.17 Figures are not yet available from 

Connecticut.

Beer distributors and soft drink bottlers argue that these unredeemed deposits should be 

utilized to help offset their costs of managing the container deposit return system. Statefunded research in Vermont in 2007, for example, indicated that unclaimed deposits were 

more than offset by the distributors’ costs of operating the redemption system and paying 

the handling fee; there was no “windfall.” Others argue that the beverage industry is 

already keeping revenue from the sale of scrap container materials (aluminum, plastic 

and glass) as well as the “float” (deposits collected from retailers that can be invested for 

short-term returns), and that unclaimed deposits are tax-free, windfall profits for the 

bottler/distributor. They argue that unclaimed deposits, like other types of abandoned 

property, should belong to the state and be used for public benefit. Nearly every deposit 

state has attempted to escheat the unclaimed deposits as a source of revenue, in some 

cases to fund environmental programs. 

The mechanism for collecting and refunding the deposits varies from state to state as 

described below:

Strategy Description Example

a) Unclaimed 

deposits –

voluntary, 

industry 

controlled

Systems charge a 

deposit at the time of 

purchase to encourage 

the return of the product 

(commonly used with 

beverage containers). 

Unclaimed deposits are 

used by industry to 

finance the system.

- Beer Store in Canada – for 60 years; 

attains 97% recovery for standardized 

glass bottles for refilling.

- US beer and soft drink deposits circa 

1900 to 1970.

b) Unclaimed 

deposits –

mandatory, 

industry 

controlled

Distributors mandated 

to charge a deposit at 

the time of purchase to 

encourage the return of 

the product (commonly 

used with beverage 

containers). Unclaimed 

Distributors are financially obligated to 

fund the operation of the redemption 

system and use the unclaimed deposits 

to defray expenses including mandated 

handling fees of up to 4¢ per container.

- In Iowa, Oregon, and Vermont 100% 

of the unclaimed deposits are 

 17 Sources: “Beverage Container Deposit and Redemption Statistics: For the Period October 1, 1999–

September 30, 2000”, March 2002, New York State Department of Environmental Conservation, Division 

of Solid and Hazardous Waste Reduction & Recycling, Bureau of Waste Reduction and Recycling; 

Massachusetts Department of Environmental Protection chart, “MA Bottle Bill Return Rate Information 

FY 1990-FY2002;” E-mail communication with Matt Flechter, Recycling and Composting Coordinator, 

Michigan Department of Environmental Quality, Jan. 29, 2003.
50

Strategy Description Example

deposits are used by 

industry to finance the 

system.

retained by the distributor.

- In Maine only distributors that operate 

comingled collection programs are 

permitted to retain the unclaimed 

deposits

- In New York distributors retain only 

20% of unclaimed deposits. 

c) Unclaimed 

deposits –

mandatory,

governmen

t escheat

Unclaimed deposits 

(typically from 

beverage containers) are 

utilized by the state. 

The funds are used for 

various recycling or 

solid waste programs 

(or for unrelated 

purposes).

California, Connecticut, Hawaii, 

Massachusetts, and Michigan collect 

100% of the unclaimed deposits, 

although the mechanism for retaining 

these deposits varies. 

- In California and Hawaii, the state 

collects the deposits from 

distributors when the beverages are 

sold to retailers. The bottler or 

distributor pays the deposit directly 

into a state-managed fund and 

collects the deposit from the 

retailer. The retailer then collects 

the deposit from the consumer. Any 

unclaimed deposits simply remain 

within this state-managed fund. 

- In the industry-managed programs 

of Connecticut, Mass., Michigan, 

and New York, government

escheats some or all of the 

unclaimed deposits so funds are not 

available to underwrite program 

operation.

- Connecticut and Massachusetts 

escheat 100% of unclaimed deposits

- Michigan escheats 100% of 

unclaimed deposits and 

redistributes 25%of the total to 

retailers as a partial offset of 

redemption costs.

- Maine permits distributors operating 

commingled collection programs to 

retain unclaimed deposits, but other

distributors lose the unclaimed 

deposits to the state. 

- New York escheats 80% of 

unclaimed deposits.
51

Strategy Description Example

d) Partial 

Refund

Systems that refund a 

portion of the deposit 

paid by consumer.

New Brunswick, Newfoundland, Nova 

Scotia, & PEI impose a deposit that is 

double the available refund value (“halfback” programs). The provinces collect 

the unrefunded portion.

1) Financial sustainability

(Including the following considerations: Potential to provide reasonably secure, 

sufficient, stable and ongoing financial resources; Potential to make a significant 

contribution to a long-term solution; Potential to avoid escheats and assure that 

funds are used for the intended purpose)

In the U.S., all deposit programs for beverage containers are financed and managed by 

the beverage manufacturers except in California and Hawaii. A significant amount of the 

program financing comes from the sale of recycled materials, and the rest is funded by 

the manufacturers. In some cases unredeemed deposits are an additional source of 

financing, but it should be noted that unredeemed deposits approach zero as the recycling 

rate rises to near 100%. Deposits are not meant to be a funding source; they are an 

incentive to get consumers to return their containers, and when successful, realize little 

revenue from unclaimed deposits. Therefore it is somewhat unlikely that deposits will 

develop into a comprehensive financing solution for packaging. However, it may be 

feasible, and in fact desirable, to address shortcomings in existing container deposit 

systems, in which case deposits can be an effective solution for specific materials, such as 

beverage containers.

An issue some stakeholders have with deposits is that the funds collected are not always 

secure. If managed by industry there is no guarantee funds will be invested in the system, 

and if managed by government there is a high likelihood that funds will be utilized to 

offset state budget shortfalls or other purposes. Ensuring that funds are used for their 

intended purpose and not borrowed or taken for other needs, whether for public good or 

for profit, is essential, but again, unclaimed deposits are not the intended funding 

mechanism. Some stakeholders believe that industry-managed beverage container 

programs are a form of EPR. The intended funding mechanism is to have producers fund 

end-of-life management and build those costs into the price of the product. Also, a 

mechanism for adjusting deposits with inflation would help ensure the value of the 

deposits does not erode over time, which results in lower redemption rates and higher 

numbers of unclaimed deposits. 

Ultimately, this approach may be perceived as unsustainable because it relies in some 

part on failure of the recycling system for funding. The better it works (the more bottles 

are recycled directly by consumers), the fewer funds are available through unclaimed 

deposits to support the system. Revenue is raised through failure of recycling. That said, 
52

there will be uncollected deposits and these can and should be used to increase recycling, 

though they are not always used for that purpose in deposit states that take the unclaimed 

deposits.

2) Value chain, communication and action

(Including the following considerations: Potential for feedback loops across the 

system (e.g., product design, waste collection, after-market channels) to resolve 

current market disconnects; Potential for effective consumer incentivization 

(through transparent cost signals or other means); Potential to influence consumer 

behavior in needed ways; Potential to improve recycling rates in the U.S.; Potential 

to incentivize innovations in packaging design (e.g., recyclability, minimizing full 

life-cycle costs, light-weighting, general end-of-life management); Potential to foster 

innovation in processing technology; Potential to establish a level playing field 

between recyclables and virgin materials / Encourage markets for recycled 

materials; Potential for allowing clear recognition and allocation of roles and 

responsibilities across the value chain)

Deposit systems are closed-loop programs. With the exception of CA and HI, it is the 

responsibility of the beverage industry to take back their own containers for recycling, 

and they control the movement of materials and can choose to use them to make new 

bottles and cans or sell them to others. 

Deposits have been demonstrated to incentivize consumers quite effectively; bottle bill 

states boast recycling rates for beverage containers between 67 and 95% (though these 

rates includes redemptions of containers from outside the deposit state). This strategy can 

undoubtedly improve container recycling rates in the US. Deposits have fostered 

innovation in processing technologies for individual container redemption (i.e., reverse 

vending machines), although the applicability of this technology to non-deposit 

jurisdictions or other types of containers has yet to be demonstrated. Deposits have a 

smaller influence on innovations in packaging design. Deposits encourage markets for 

recycled materials by virtue of the fact that they result in the collection of large volumes 

of clean materials, creating ample supply of raw materials for use in recycled-content 

products. For example, glass beverage container recycling is much improved with deposit 

return systems, reducing costs and raising marketable values throughout the system. The 

glass is clean and often separated by color for much better recovery. However, not all 

players in the value chain derive full benefit from deposit systems. Materials Recovery 

Facility operators experience a decrease in recoverable aluminum and PET containers 

(and associated revenues) from curbside programs, as these materials are captured 

through the deposit scheme.
53

3) Efficiency and cost control 

(Including the following considerations: Potential to operate efficiently and reduce 

total system costs in the long run, Potential to improve the efficiency of the recycling 

system)

Although there are some claims that Bottle Bills create bloated public sector departments, 

in practice this does not seem to be the case. In Hawaii, 3 government employees 

administer the system. California has 240 government employees, which is proportional 

to the 28.5 employees that administer beverage container programs for Encorp in British 

Columbia, where the program is industry-run (given the population in BC and CA, there 

is one administrative employee for about every 150,000 persons in each respective 

jurisdiction). In other industry-run Bottle Bills, there are typically two or fewer 

government FTE positions to oversee the program, while administration is done by 

industry. Developing deposit legislation covering all product types would be 

unreasonably cumbersome and impractical, but if specific brand owners are required to 

achieve high rates of recovery for specific packaging types, they may choose to use 

deposits. This strategy’s best role may be to maintain high levels of recovery for 

beverage containers since there are ancillary benefits of a clean stream of other 

recyclables (e.g., free from glass contamination) which reduce processing and other 

system costs, though this can increase costs to retailers and distributors. Some 

stakeholders view the redundancy of a deposit system existing alongside a curbside 

system to be a significant source of inefficiency and feel that having parallel systems 

does not make sense from an economic or environmental standpoint. Others point out 

that one-size-fits-all approaches seldom achieve optimal results. Products and packaging 

evolve and so do points of generation; a diversity of collection options are needed to 

ensure that as products and end-of-life aspects change, the collection system is flexible 

and able to accommodate the material.

Another potential concern centers around the tendency for bottle bills to pull aluminum 

cans out of the curbside recycling stream, thus negatively impacting revenues. Data 

available from Stewardship Ontario indicates that aluminum is the only material in 

curbside recycling programs that generates net positive revenue, but the overall 

contribution from aluminum remains a small piece of total costs. However, there can be 

variability in commodity prices across individual markets.

An important distinction of deposit systems is that they work well in away-from-home 

settings such as events, workplace, and on the road. This results in a much higher rate of 

deposit bottle recovery in these areas that challenge most current recycling systems. If 

current shortcomings are addressed, deposit systems may be able to work in harmony 

with curbside programs, and given the costs that would be incurred to achieve similar 

away-from-home results from other programs; this combination of programs could serve 

to increase overall system efficiency. 
54

4) Consistency, reach and scalability

(Including the following considerations: Potential for implementation across 

jurisdictions (municipality to municipality, state to state, and region to region); 

extension nationwide; Potential to accommodate the full array of consumers (e.g., 

single family homes, multi-family dwellings, commercial and away-from-home 

sources, and underserved communities)

A national bottle bill would require a large effort, but is possible, and has been called for 

by some stakeholders. This could result in a consistent system and eliminate existing 

concerns within states about fraudulent transport of non-deposit containers across state 

lines to claim deposit funds. It is also possible, given state-to-state differences in waste 

management and the traditional primacy of state and local governments in solid waste 

management issues that programs would still vary among the states, or existing state 

programs might be grandfathered under a federal plan. Given that the manufacturers, 

distributors, and retailers that play a role in the system often operate nationally, they are 

also well-positioned to design and operate a deposit system on a national scale. Bottle 

bills are effective at addressing away-from-home recycling and litter as there is a 

financial incentive for individuals to collect containers for redemption wherever they may 

be found in public areas. Beverages differ from many other consumer products, in that 

30-50% are consumed away-from-home. Finally, deposits do encourage consumers to 

return the materials and can provide many collection / take-back locations. According to 

data from Onondaga County, NY, at least 65% and as much as 80% of non-returnable 

plastic bottles - typically bottled water - end up as trash; at best only 35% are recycled 

through the blue bin. In comparison, at least 60% -- and as much as 77% -- of returnable

plastic containers are recycled through the redemption system.18 Waste characterization 

studies conducted by the State of Massachusetts found a 3 to 1 ratio of non-deposit 

containers to returnable containers in the trash disposed, meaning there are 3 non-deposit 

containers in the trash for every 1 that is returnable.19

5) Ongoing performance 

(Including the following considerations: Potential for measurable performance 

data, Potential to produce high-quality commodities, Potential for sufficient 

flexibility to allow for improvement of recycling system technology)

Measurability is also a strength of this strategy. The amount of deposits, amount 

refunded, amount of unclaimed deposits, and tonnage of material collected are readily 

available metrics, although the integrity of the data is affected by cross-border 

redemption and the difficulty of tracking sales for products on a state-specific basis. As 

discussed earlier, deposit systems also produce high-quality clean streams of 

 18 OCRRA Legislative Brief provided by Tom Rhoads, Executive Director, OCRRA. Onondaga County 

Resource Recovery Agency (OCRRA) March 6, 2009. 19 Massachusetts Department of Environmental Protection, “Massachusetts Waste Characterization Study”, 

as reported by Greg Cooper, John Fischer, and Sean Sylver, 2011.
55

commodities, which increase the value of the collected material as well as of other 

materials that would otherwise have higher levels of contamination. 

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

(Including the following considerations: Potential for support [or lack of concerted 

opposition] from consumers, retailers, brand owners, and elected officials, and 

Political feasibility)

Bottle bill opponents include beverage container manufacturers, soft drink bottlers, beer, 

wine and liquor distributors and retail grocers. A new group of bottle bill opponents that 

has emerged in recent years consists of waste haulers and owners of materials recovery 

facilities who are not responsible for full system costs, and local governments who do not 

accurately track full system costs. These opponents want the revenue from the valuable 

aluminum cans that are recovered through bottle bills. Even though North American data 

show aluminum’s contribution as a small piece of overall system revenue, this is 

significant to some stakeholders and concerted opposition is a sure thing. Although there 

is ample data demonstrating the effectiveness of deposit legislation with regard to 

recycling rates, opponents feel that this legislation creates undue complexity and 

introduces unnecessary costs. For these reasons, any new deposit legislation is likely to 

be a highly politically charged issue. Resistance to deposit legislation can be addressed 

and potentially overcome by a variety of strategies, such as:

• Re-writing “bottle bills” so the rules are clear and consistent. Container return 

legislation should include targets and recycling standards, transparent reporting 

requirements, clear definitions of roles and responsibilities, and robust governance 

mechanisms to resolve problems that arise. Legislation should also leave the design 

of the system to producers, and encourage a diversity of return channels for 

containers to reflect the diverse channels of distribution and sale. 

• Clearly communicating true system costs, so that those who are collecting bottles and 

cans are aware that a deposit system will save them a lot of money, that aluminum is 

a loss leader, and also to communicate the consumer costs for participating in the 

redemption process.

B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

Deposits have a track record of providing excellent recovery rates. They encourage 

consumers to return the materials and can have a significant impact on challenges such as 

litter, and collections in away-from-home, rural, and multi-family dwelling settings. 

Beverage containers represent 17.4% of the overall packaging waste stream. 

Implementing deposits across the country would most certainly improve the status quo 

recycling rates for beverage containers, but this strategy is not likely to be as practicable 

for many other forms of packaging. Deposits on all packaging would be extremely 
56

difficult to create, impose and manage. For example, corrugated cardboard already has a 

very high rate of recycling, and would engage a large number of additional stakeholders 

with a vested interest. The potential gain in recycling rate may not be justified given 

political challenges. If mandatory and industry-controlled, this approach for beverage 

containers could be part of a broader system of extended producer responsibility, or stand 

alone as it currently does. 

C) Characterization of likely cost in relative, qualitative or quantitative terms

Deposits are promising if unclaimed deposits to run programs and funds that are intended 

to incentivize recycling are actually kept in the recycling system. There will be 

uncollected deposits and these can and should be used to increase recycling. If a partial 

refund is utilized, the approach provides incentive to return, as well as funding to support 

expanded recycling and litter pick-up. If used properly, this is an appropriate and targeted 

way to finance recycling. Ultimately, a deposit system can only have the potential to fund 

collection of the materials covered by the deposit. Unredeemed funds from deposits on 

one type of packaging should not be used in a significant way to fund the recycling of 

other packaging which does not carry a deposit.

For complete data on the container deposit laws in each state/province, visit: 

http://www.bottlebill.org/legislation/usa/allstatestable.htm
57

C. Rate-payer Funded Strategies 

Fees at Time of Recycling 

For some products that contain toxic components or are difficult to manage, the market 

price for the recycled product is less than the costs to collect and process the material. In 

the absence of another financing mechanism, it is necessary for the recycler (or other 

entities) to charge a fee to the consumer to cover the cost of recycling the item. 

Examples would be fees charged by a business, landfill or recycling center at the time of 

return of tires or compact fluorescent light bulbs.

For the purposes of packaging, this assessment envisions a system of fees based on 

weight and types of material collected. Because this would create a disincentive to 

recycle, disposal bans are assumed to be enacted as well. This represents a significant 

change in policy and current practice.

1) Financial Sustainability 

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources 

This strategy’s potential to provide sustainable financial resources to the recycling 

system is questionable because it is dependent on consumer participation and 

assumes that there will be cooperation from the general public to pay for disposal 

(recycling) of their packaging. The fact that they will be paying after the fact, 

would certainly lead to expectations that participation will be an issue and might 

lead to illegal dumping. The financial sustainability would certainly be 

questionable.

Potential to make a significant contribution to a long-term solution

The strategy’s potential to make a significant contribution to a long-term solution 

is questionable. The fees collected would have to match the cost of recovery and 

material processing and would vary based on location, infrastructure and market 

forces. Fees collected would have to be based on weight of and types of material 

collected. This would make it very difficult to track or verify. For instance, if 

there is only one hauler in a community, who would verify the costs to insure that 

consumers are being fairly charged? The collection would fall to either private or 

public schemes, and there is the possibility for competition among collectors. 

Most likely, this would have to revert to a subscription system of payment in 

order to allow consumers to budget for their recycling removal.

Potential to avoid escheats / Assure funds are used for intended purpose

Risk of escheats is not an issue with this strategy because deposits or fees are not 

collected in advance. However, ensuring that the funds will be spent for their 
58

intended purpose is an issue because there are no guarantees on what will be done 

with the material after collection.

2) Value Chain, Communication and Action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

Somewhat of a feedback loop would be achieved if purchase intent is impacted by the 

fees that consumers are paying for recycling. Certainly weight and excess packaging 

would be a factor that brand owners may have to pay attention to, and possibly there 

would be a benefit for using materials that are easily recycled, or have more value in the 

recycling stream. There would be very little recognition for use of recycled content, and 

this doesn’t help motivate companies to improve material or process health or safety. 

Effective consumer incentivization (through transparent cost signals or other 

means)

These costs will not be transparent at all. The costs to the consumer will depend on 

constantly changing disposal fees and how they are impacted based on material type and 

weight of packaging and what is collected.

Potential to influence consumer behavior in needed ways

Consumer behavior may be influenced because they will begin to understand the cost 

impact of what they buy and bring home as they pay for their recycling fees. However, 

because the disposal fees would be paid at the time of disposal and not when the product 

is being purchased, this influence would likely be limited.

Potential to improve recycling rates in the U.S.

This strategy would not improve recycling rates on its own. It could only do so if 

recycling is required by law and there are enforceable bans on putting the materials into 

landfills and illegal dumping. Enforcing a landfill ban on packaging would be extremely 

difficult and would require significant resources for the regulatory agency, and is in effect 

a separate strategy. Illegal dumping is already a large and expensive problem for many 

cities and counties. The combination of landfill bans and fees for recycling would likely 

increase this problem.

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

There is limited feedback loop to producers; however, consumer behavior may drive 

package design as mentioned above.
59

Potential to foster innovation in processing technology

If there is competition among collectors of the material, there is the possibility to foster 

process innovation and technology. However, because most municipalities and 

communities only contract with one hauler this possibility is limited and the costs to the 

consumer would be very hard to control. Legislation would almost certainly be necessary 

to control costs and influence process innovation.

Potential to establish a level playing field between recyclables and virgin materials / 

encourage markets for recycled materials

This strategy would not encourage markets for recycled materials. The real issue is 

finding markets for all the material collected, and ensuring the quality of that material to 

encourage its purchase. 

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

Under this strategy, roles and responsibilities are not allocated across the value chain, but 

rest with the local municipality to enforce and to administer, either by setting up their 

own collection scheme or by hiring a private collector.

3) Efficiency and Cost Control 

Potential to operate efficiently and reduce total system costs in the long run 

There is minimal potential with this strategy to drive efficiency and reduce system costs. 

If enforceable, it could operate efficiently, and collect more material, but not necessarily 

at a reduced cost. Certainly the consumer would be paying more. There does not seem to 

be any incentive in the short run to improve package design. Consumer buying habits 

may drive efficiency in the long run. 

Potential to improve the efficiency of the recycling system

The efficiency of the recycling system would likely improve because of the availability 

of funds to invest in equipment. There might also be sufficient funds to allow for source 

separation of materials, thereby improving the quality of the materials collected.

Potential for Cost control 

Because fees would vary based on many factors (material type, weight, value, hauler, 

infrastructure, etc.), it is unclear how cost control under this system would be achieved.
60

4) Consistency, Reach and Scalability

Potential for implementation across jurisdictions (municipality to municipality, 

state to state, and region to region) / extension nationwide 

It is unlikely that consistent implementation of this structure would be achieved. It would 

require legislation across all jurisdictions, as well as require the general public to 

understand and accept a much higher and more complex fee structure.

Potential to accommodate the full array of consumers (e.g., single family homes, 

multi-family dwellings, commercial and away-from-home sources, and underserved 

communities) 

It would be difficult if not impossible to assign costs to multi-family dwellings, and it 

would certainly reduce away-from-home collection because the municipality would have 

to foot the bill. Lower income households would be less likely to use the system.

5) Ongoing Performance 

Potential for measurable performance data

Under this strategy, any measurable performance data would come from the providers of 

the service. Although it might not capture the increase from current strategies, it should 

be able to collect relatively good data on what is being collected under this strategy since 

the fees being paid would be directly related to what is collected.

Potential to produce high-quality commodities

This strategy could provide high quality commodities if the fees covered the cost of 

source separation or technology to sort to high quality levels. 

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

There is good potential for flexibility under this strategy but it is dependent on the 

provider’s ability to justify the cost. 

6) Overarching Considerations

A) Feasibility (degree of difficulty to achieve) 

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials 

There is likely to be very high resistance to this strategy because many consumers are not 

now paying for recycling service today, or it is not transparent that they are paying for it. 
61

A fee at the time of recycling is very visible, similar to Pay as You Throw. If the strategy 

is to collect more material for recycling there is going to be a pretty significant increase 

in the cost, due to the cost of improving infrastructure and quality. Understanding and 

managing any realistic fee structure will also add to costs and confusion about what the 

costs are for. 

This strategy would most certainly be an issue from the multi-family and away-fromhome collection standpoint, adding costs to these providers of service. 

Political feasibility

Politically speaking it will be almost impossible to legislate the needed landfill bans on 

packaging that would be required. This will likely be viewed as a more complicated and 

expensive fee or tax on packaging material. 

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

The complexity of this program for consumers is tremendous. For instance, how would 

this system account for individual fees per consumer based on what they recycle? And 

producers and retailers would have no role in the system. There would also be added 

complexity for haulers and government. 

B) Degree of impact (high, medium, or low) on the present challenges with financing 

recycling of municipal solid waste 

Degree of impact is unclear, as the strategy is conceptual only and untested. If managed 

by private haulers, the strategy would assume the cost burden from municipalities, but 

increase the burden of administering and policing the program. Trying to manage this 

type of program in total by a municipality would be all but impossible. 

C) Characterization of likely cost in relative, qualitative or quantitative terms

Likely cost is unclear, as the concept itself is conceptual only and untested. The logistics 

of this strategy would pay for itself, but the management and policing by state and local 

agencies would go up significantly. And because the fee is going directly to the recycler 

there would not be a mechanism for the state and local agencies to recoup this added cost. 

The most likely outcome would be that consumers would pay more out of pocket (at least 

30%) with more material being recovered, but it is doubtful that it would end up 

increasing the value or use of the material collected. 
62

Subscription Service

A subscription service is a recycling collection service for which a household contracts 

directly with a waste management company, or pays for directly to the municipally 

contracted waste management company. The household using or subscribing to the 

service pays the costs of the provided service. There are many forms and constructs of 

subscription services and this paper generally addresses the most common arrangements 

at a high level.

For some households in the U.S., curbside recycling service is provided as an additional 

service through service contracts with waste management companies. This type of 

arrangement might occur in jurisdictions that do not have a municipal recycling contract 

with one or more vendors. Subscriptions can also be used within a county or city 

controlled system, including required and/or franchised subscriptions. In most cases, the 

waste management companies that provide household garbage collection service also 

provide the recycling services.

Recyclable materials generated by businesses have been determined to be interstate 

commodities and therefore their regulation by state or local governments is limited 

(although not entirely foreclosed). As a result, businesses in a given area may contract 

directly with another recycling hauler than the recycling hauler that is providing 

collection service to the residential sector in that same area. 

In subscription service areas, waste management companies may be required to offer 

recycling to households through licensing, to meet service level requirements set in city 

or county code, through contracting with a local solid waste authority, or through some 

other mechanism. 

Subscription services can be paired with a broader array of regulatory approaches such as 

a mandatory recycling requirement, bundled garbage/recycling services, an aggressive 

variable rate pricing initiative to discourage disposal, or disposal bans. These and other 

tools have been shown to increase the effectiveness of subscription services.

The principal benefit of subscription service is that it offers the potential for greater 

transparency regarding solid waste management and recycling services. Consumers are 

responsible for, and see or are aware of, the costs of providing solid waste and recycling 

collection services which may influence their decisions to recycle and/or dispose of a 

particular product or material. 
63

1) Financial sustainability 

(Including the following considerations: Potential to provide reasonably secure, 

sufficient, stable and ongoing financial resource; Potential to make a significant 

contribution to a long-term solution; Potential to avoid escheats and assure that 

funds are used for the intended purpose)

Since subscription does not rely on public funding it may be somewhat shielded from a 

decline in public revenues. It can avoid escheats since funds are either paid directly to 

the service provider or held by a contracting authority for payment to the service 

provider. Where multiple service providers are allowed, or where companies compete for 

municipal contracts or licenses, the approach may also foster greater competition among 

waste management companies which may spur innovation and result in more competitive 

rates for households. 

However, subscription service fees rarely cover the full cost of recycling and recycling 

education within a community which may also provide other recycling collection options 

such as drop-off costs and away-from-home. Relying on purely voluntary subscription 

service generally does not meet the objectives of sustainable financing for municipal 

recycling (e.g., secure, sufficient, stable, and ongoing). Required subscriptions can be 

more effective especially when combined with bundled rates (one monthly fee that covers 

both garbage and recycling collection) and variable rates that are based on the size and 

frequency of the garbage pickup service.

2) Value chain, communication and action 

(Including the following considerations: Potential for feedback loops across the 

system [e.g., product design, waste collection, after-market channels] to resolve 

current market disconnects; Potential for effective consumer incentivization 

[through transparent cost signals or other means]; Potential to influence consumer 

behavior in needed ways; Potential to improve recycling rates in the U.S.; Potential 

to incentivize innovations in packaging design [e.g., recyclability, minimizing full 

life-cycle costs, light-weighting, general end-of-life management]; Potential to foster 

innovation in processing technology; Potential to establish a level playing field 

between recyclables and virgin materials, and encourage markets for recycled 

materials; Potential for allowing clear recognition and allocation of roles and 

responsibilities across the value chain)

Subscription services do not institute a feedback loop regarding end-of-life management 

costs that could encourage innovation in packaging design to improve recyclability or 

reduce overall environmental impact. Subscription based recycling programs fail to 

bridge the disconnect between design and marketing decisions and the costs of end-of-life 

management.

Some types of fee for service programs can create a financial disincentive to 

participation. Examples include situations where participation in garbage collection 
64

services is voluntary and there are separate additional costs for recycling service, or the 

recycling service is bundled with garbage service. In either case, increased costs can 

discourage households from subscribing. Also, the costs for recycling on a per household 

basis are typically higher in voluntary subscription service areas than in those areas with 

mandatory services due to lack of route density and economies of scale. Other types of 

subscription programs can include a cost-incentive structure to encourage sign up and use 

of household recycling programs.

Without other incentives such as mandatory participation, bundled rates and variable 

rates, this strategy does not greatly influence consumer behavior given the lack of defined 

cost signals and the difficulty in implementing a consistent public education and outreach 

program for households in subscription areas. 

If paired with these other policies to promote recycling and discourage disposal, 

subscriptions can help improve recycling rates.

Subscription service-based recycling activities have little ability to incentivize innovation 

in both packaging and recycling technology given the level of disaggregation in the 

system and lack of uniformity. Also, in some subscription service areas, since the local

government is less engaged in providing or paying for recycling services, performance 

standards, costs, regulation and assurance of investment in MRF technology, etc., can be 

lax, as there is no “advocate” for the subscribers. In areas where the municipality 

contracts directly for material processing services, public bidding laws that require 

contracting with the low bidder can encourage poor sorting practices that lead to lower 

material quality in order to reduce costs. 

3) Efficiency and cost control

(Including the following considerations: Potential to operate efficiently and reduce 

total system costs in the long run, Potential to improve the efficiency of the recycling 

system)

Relying on a “free-for-all” subscription service is generally inefficient since many 

haulers service the same areas on overlapping or duplicative routes, use different 

processors, and generate duplicative public information thus undermining the benefits 

associated with a coordinated system. 

Franchised or required subscription services with a single service provider can operate 

more efficiently and help affect cost control. However, as explained above, in some 

subscription service areas, since the local government is less engaged in providing or 

paying for recycling services and there is no “advocate” for the subscribers, costs can be 

higher and performance lower. Alternatively, the desire to reduce costs leads directly to 

the production of lower quality materials.
65

4) Consistency, reach and scalability 

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

A ‘free-for-all” system could not be consistent nationally, but a franchised system could, 

to a degree, depending upon scale of implementation. Given the large number of 

decision makers in the current system, it is highly unlikely that any subscription program 

can be implemented with reasonable consistency across jurisdictions on a national basis. 

It is more likely that consistency could be achieved on a state-wide basis. 

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

Subscription can be implemented across jurisdictions or even on a regional basis. A 

‘‘free-for-all system” is not effective at incentivizing participation in recycling. 

However, franchised or required subscriptions, can achieve higher participation in 

recycling by households. Combining subscription services with other policy measures, 

such as recycling mandates, disposal bans, and variable rate pricing is needed to really 

incentivize participation. 

This strategy is not well suited to expanding collection infrastructure in non-residential 

settings including “away-from-home” or public venues. This is in part due to the inability 

to franchise or flow control commercial recycling. 

5) Ongoing performance

Potential for measurable performance data

Subscription programs can provide measureable performance data if data collection and 

reporting is included in the program design and contract. 

Potential to produce high-quality commodities

This depends in large part on the collection method employed. Where recyclables are 

source separated by the generator, higher quality commodities are produced. 

Commingled or single-stream systems tend to produce lower quality materials as the 

drive to lower system costs combined with bidding laws, incentivize MRFs to spend less 

time sorting materials as long as the market value of what they produce is high enough to 

generate adequate revenue. 
66

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

Subscription service contains flexibilty, but not sufficient to drive improvements. Again, 

this is more dependent on how materials are collected and the nature of the contract with 

the contracting authority. Improvements in recycling system technology will typically 

require additional investments in processing technology which will result in either lower 

profits for the MRF or higher costs for the system subscribers. The move toward single 

stream or commingled recycling has necessitated improvements in recycling system 

technology in order to effectively separate the materials for market.

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

(Including the following considerations: Potential for support [or lack of concerted 

opposition] from consumers, retailers, brand owners, and elected officials; Political 

feasibility; Avoidance of undue complexity for producers, retailers and consumers 

in implementation)

If locales are not currently using a subscription service, switching to one could be met 

with significant resistance, as people would now be charged for something they perceived 

was either free or was included in another fee or cost. There is more fairness in a 

subscription/user pay system; however, subscription systems that are required and/or 

franchised can be met by opposition from people who do not choose to recycle or use the 

franchised company. 

Subscription approaches that are not required rely on households’ commitment to 

recycling rather than a financial incentive to encourage recycling. Commercial recycling 

via subscription services are often met with resistance due to the extra bill for recycling, 

unless the cost of recycling is offset by a reduced garbage collection cost. 

B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

A subscription service does not constitute a meaningful significant change from the 

present reality or offer the potential to do so. It may be an important step for those 

underserved communities that do not have any access to recycling services or that need to 

move recycling costs from the public budget and place them directly on the users of the 

service. However, it would require significant policy changes by thousands of local 

governments in order to have much of an impact on the problem.

This model constitutes the status quo – the current, common system which is not 

adequately funded and in which recycling rates are stagnant. The approach fails to 

adequately address key areas for recycling services such as multi-family, commercial and 

away-from-home options. 
67

Pay-As-You-Throw

“Pay-As-You-Throw,” also known as unit pricing or variable-rate pricing, refers to the 

strategy of charging residents for the collection of municipal solid waste based on the 

amount they throw away. The intention is to establish a direct economic incentive to 

recycle more and to generate less household trash. Pay-As-You-Throw (PAYT) departs 

from the tradition of paying for waste collection through property taxes or a fixed fee 

regardless of how much waste a household is responsible for generating. 

Most communities implementing PAYT charge residents a variable rate depending on the 

amount of service they use – a fee for each bag or can of waste they generate. A small 

number of communities bill residents based on the weight of their trash. Individuals pay 

more the more they throw away, increasing the incentive to recycle.20

Dialogue participants differed on the question of whether PAYT constitutes an actual 

funding mechanism or simply a means to motivate participation in recycling programs. 

Participants generally agreed that the approach can play an important role in a recycling 

system by helping to divert material from landfills. 

1) Financial sustainability 

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources

PERSPECTIVE 1: PAYT is a method of direct financing and if designed 

properly can provide secure, sufficient, stable, and ongoing resources. PAYT is a 

user fee, or a rate, like other rates, and provides cost recovery and usage signals. 

Just like other rates, its goals include simplicity / unambiguity, sufficiency 

(covering costs), stability, equity (horizontal and vertical), and many others. 

PAYT systems can be designed to meet these criteria; the rate-setting 

computations are not significantly more difficult than for other rate designs. 

PERSPECTIVE 2: PAYT is an incentive rather than a direct funding method. 

Furthermore, bundling all costs into the disposal fee is not sustainable. As 

disposal amounts decrease, rates have to increase significantly.

If the costs of all services are embedded in the trash rate, there may be a “death 

spiral” (similar to the concerns at landfills). The trash set-outs become so low 

because so much material is diverted or reduced, that the rates for even very small 

volumes can become exorbitant. PAYT systems have been in place since before 

1920 and widespread since the early 1990s. Remedies include being more 

judicious about costs that are embedded, and breaking some into additional user 

fees (e.g. higher levels of yard waste collection), or recovering some from taxes or 

 20 EPA, “Pay-As-You-Throw”, http://www.epa.gov/osw/conserve/tools/payt/, accessed on August 19, 

2011.
68

other sources (environmental fee for some of the costs, or some might argue,

advance disposal fees). 

Potential to make a significant contribution to a long-term solution

PERSPECTIVE 1: The strategy is well-suited to serving as the financial premise for a 

recycling system. 

The best PAYT program design (best management practices) includes recycling available 

for all households,

21 with the cost of this recycling service embedded in the trash rate 

(recovered as part of the trash bill). This is a legal, justifiable, stable source of revenue 

for recycling systems.22

Embedding the recycling cost in the bill (no separate fee) leads to significantly 

more recycling. Embedding the cost of yard waste collection services (no 

separate fee) also leads to higher yard waste diversion. However, there are 

several reasons for considering whether or not to provide organics service at no 

additional fee.23 Considering “recycling” in the larger sense of responsible waste 

management / diversion (e.g., including some or all of yard waste, food waste, 

source reduction, hazardous waste, education), the costs may become burdensome 

and may led to political reactions – especially if the change is from a situation of 

no bill or fixed bill, to a much increased average household trash-related services 

bill. 

PERSPECTIVE 2: PAYT is an important incentive for successful recycling systems, but 

it cannot realistically serve as the financial premise for a large-scale recycling system. 

The strategy is not readily adaptable to all households - specifically multi-family 

applications from urban apartments to rural trailer parks with common trash containers. 

While it works well in high end suburban single family development to incentivize waste 

reduction and recycling, there has been very limited practiced success in large 

multifamily settings in the US. PAYT also is not applicable to venue and away-fromhome recycling. PAYT has limited value in commercial environments where the trash or 

recycling bill is not directly connected to the consumer. Since it therefore serves such a 

small portion of the entire recycling system it is not a comprehensive solution.

 21 Note that this is commonly curbside service, but many programs work very well with drop-off 

recyclables service only.

22 As long as reasonably-accurate predictions are made about subscription levels (percent of customers 

using 30 gallons, 60 gallons, etc. of service). This is the most complex part of the rates analysis. 23 There can be considerable differences in the amount of yard waste produced by a property – and it can be 

income-related, so there are equity considerations surrounding embedding of yard waste costs. In addition, 

households can compost in their back yard, and providing “free” organics collection reduces the incentive 

for that cheapest of management strategies (and recall that homes cannot “recycle” in the back yard). 

Communities have handled this issue in many ways – embedding organics; embedding a “first can or bag” 

and using a bag or sticker or subscription system for additional volumes; pay by bag programs; subscription 

fees, and presumably others. 
69

Also, a concern with embedding the cost of recycling in the trash bill is that people 

believe recycling is free or pays for itself, and they therefore undervalue the service.

Potential to avoid the misappropriation of funds, ensuring that funds are used for 

the intended purpose

Funds are inherently safer from misappropriation with this strategy compared to many 

other approaches. The PAYT funds are rates / user fees that are kept locally at the level 

of the service provider. They generally do not accumulate in fund balances and are less 

liable to “raiding” by state or other officials during budget crunches. 

2) Value chain communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

PERSPECTIVE 1: When PAYT is in place, there is an incentive for households 

to prefer purchase of goods with recyclable packaging. There are a few isolated 

examples of consumers in communities with PAYT successfully appealing to 

manufacturers to reduce packaging (ramen noodles was the example). The 

difficulty comes from the hassle factor of connecting with the manufacturers. 

Higher PAYT rate differentials, presumably, provide stronger incentives to 

contact manufacturers to raise the issue. Alternatively, cities (educational 

campaigns, listservs, etc.) or advocacy groups might serve as conduits for the 

information and appeals. Households / generators would reap direct benefits from 

these changes in design / manufacture – benefits they do not receive from nonPAYT systems.24 

The “masses” of households would need to make the effort to express their 

dissatisfaction with the manufacturers of problematic products. Either the price 

difference would need to be enough to motivate the behavior, or the 

communication method would need to be relatively easy. In this day of electronic 

communication, that latter barrier is decreasing.

PERSPECTIVE 2: While PAYT can cause a reduction in the amount of trash set out for 

disposal, that does not constitute a direct feedback loop across the recycling system for 

product design, waste collection methodology or aftermarket channels as they relate to 

recycling. Waste reduction and recycling are not synonymous. Also if the feedback loop 

created by PAYT is simply diversion from the trash, rather than true recovery by 

recycling, there is inappropriate feedback. Tossing non-recyclables into the recycling 

container can be construed as a negative consequence of PAYT. 

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

 24 Feedback loops to waste collection and after-market channels are not clear (needs more explanation).
70

The PAYT incentive is an effective method of increasing single-family household 

waste diversion. Multiple studies have shown that PAYT provides the largest 

impact on recycling of any of more than two dozen changes a community (or 

hauler) might make to a recycling program.25 PAYT not only encourages 

recycling, but also composting and source reduction / waste prevention with a 

total effect of 17% reduction in disposed tons, and is more effective than 

alternative financial incentive designs.26 The 17% is in addition to the recycling 

already happening – not total – so this is a very strong addition to diversion. The 

literature also indicates that the cost signals can be optimized to provide strong 

recycling incentives.27

Some stakeholders raise concerns that PAYT’s “cost signals” may incentivize 

illegal dumping. Multiple studies of this issue indicate that it does not present a 

problem in 80% of communities implementing PAYT, and when it surfaces as an

issue, it is mostly due to bulky items, and it lasts about 3 months.28 To address 

this issue (and to recognize that PAYT programs, and garbage service, must suit 

all households, not just “average” households) is to make certain there is a 

convenient, well-known method for addressing bulky items. 

Some communities reportedly have chosen not to implement PAYT due to 

concerns about open burning/illegal dumping or theft of services (in example 

taking one’s trash to a nearby commercial dumpster).

Potential to influence consumer behavior in needed ways

 25 Various studies, Skumatz; 1996- 2010 26 Skumatz et.al. “PAYT and Recycling Incentives...” Resource Recycling, February and March, 2011. 

This article shows PAYT has multiple times more tonnage impact than RecycleBankTM and costs on the 

order of 3-300 times less than RecycleBankTM per ton diverted, depending on assumptions made. The 

study also examines recycling credits.

27 Skumatz 2001. The research indicates that the size of the rate differentials matter. A differential of 80% 

for double the service provides as much recycling incentive as double the rate; the authors also indicated 

minimum differentials that are needed to affect the positive recycling behavior.

28 Research in PAYT communities does not indicate that illegal dumping increases significantly in response 

to a new PAYT system. One complicating issue is that very few communities have quantitative 

information on how big a problem illegal dumping is before they establish new rates, making it difficult to 

compare changes. Several studies have attempted to address the illegal dumping issue (based on interviews 

with more than 500 PAYT communities), and the conclusions are: Low Incidence: Illegal dumping is a 

problem in a minority of communities (about 1⁄4), and all the communities surveyed said the problem was 

short term and illegal dumping should not be considered a barrier to PAYT. The research showed the 

program was a much bigger fear up-front than real experience after implementation. (Skumatz, 1993, 

“Variable Rates for Municipal Solid Waste Officials...”, SERA, Superior CO). Strategies: The illegal 

dumping problem can be addressed and can through a variety of enforcement strategies (Skumatz, 

et.al.1994, revised 2001, “Illegal Dumping...”, www.serainc.com). Not Caused by PAYT: The majority 

of illegally dumped material is not residential in origin – indicating residential PAYT/VR programs are not 

a large source of the problem (ibid). Bulky Items: Incorporating a bulky waste collection program (by 

appointment, limited number of “free bulky” tags, a charge per item, or other strategies), can go a long way 

toward reducing the potential illegal dumping problem, and helps make sure the PAYT program works for 

all residents, not just the “average” resident (ibid).
71

PAYT has demonstrated an ability to reduce the tonnage put into the trash can by 

17%29 (1/6 of the trash can) by incentivizing recycling, composting/organics 

management, and waste prevention/source reduction. Reported results of 

customer survey research indicated 76% have purchasing decision-making affected 

by PAYT, and that PAYT has a demonstrable effect on waste-generation and 

buying habits.30 Households put out fewer garbage cans for collection after PAYT 

is implemented – partly because of declines in tonnage, and partly because cans are 

“stuffed” (dubbed the “Seattle Stomp”), commonly reducing the volume of trash 

from about 90 gallons to about 30-40 gallons.31 Finally, PAYT can lead to 

significant amounts of “waste prevention/source reduction.” PAYT households 

“source reduce” about 6% of the tons of trash put out at the curb, diverting it by 

buying carefully, donating to charity, buying repairable, etc.32 These impacts have 

been measured independent of all the other changes that might be introduced at 

the same time (changes in recycling programs, etc.).33

Potential to improve recycling rates in the U.S.

PAYT commonly doubles recycling rates. The combined effects of PAYT on recycling, 

organics, and source reduction is 17%34 less weight in household trash cans – and PAYT 

works in areas with either curbside or drop-off recycling programs.

The best management practices suggest the program should have the cost of 

recycling embedded in the PAYT trash rates, and not be hampered by an extra / 

additional / separate fee. An extra fee for recycling service leads to about 5-10% 

of households signing up for recycling, which does not achieve the goals.

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

PERSPECTIVE 1: As stated above, implementation of PAYT creates an incentive for 

households to prefer purchase of goods with recyclable packaging. Higher PAYT rate 

differentials may therefore strengthen consumers’ motivation to request that 

manufacturers adjust package design.

 29 Again, the 17% is in addition to the recycling, etc. already happening – not total – so this is a very strong 

addition to diversion. Recycing generally increases 50% to 100%.

30 Skumatz 1993, “Variable Rates for Municipal Solid Waste...”, for the Reason Foundation, Los Angeles. 31 Impacts on volume are greater than impacts on tons because of the “stomping” effect. (Skumatz 1993, 

“Variable Rates for Municipal Solid Waste...”, for the Reason Foundation, Los Angeles).

32 Skumatz, “Source Reduction can be Measured”, for EPA and others, 2001 33 That is, adding PAYT plus single stream recycling, or PAYT plus a new curbside organics program will 

increase the diversion even more, but that is not the PAYT impact alone. These results are attributable to 

PAYT, independent of demographic and programmatic differences. 34 Again, the 17% is in addition to the recycling, etc. already happening – not total – so this is a very strong 

addition to diversion.
72

End-of-life management responsibilities for costs are generally borne by the generators in 

a PAYT system. This may not be the best information method to strongly and directly 

encourage redesign – but it is one of the simplest.

PERSPECTIVE 2: This strategy has low potential to incentivize packaging changes as it 

relies on concerned citizens or local governments to contact manufacturers with 

complaints, and requires manufacturers to respond to those complaints.

Potential to foster innovation in processing technology

PAYT does not interfere with recycling processing innovations. In fact, as more 

and more tons are driven to recycling (due to the PAYT incentive), economies of 

scale support greater innovation and can result in greater returns to processors 

from those innovations. 

However, if the processing innovations are related to “dirty MRFs”, then PAYT 

does not seem like a good match. 

Potential to establish a level playing field between recyclables and virgin materials / 

encourage markets for recycled materials

PERSPECTIVE 1: PAYT can encourage markets and partially level the playing field. 

The strategy leads to large increases in the amount (volumes and tons) of recyclables, and 

thus improves the economies of scale and helps smaller markets divert enough material to 

make it more economical to get to market. To some extent, the improved volumes (and 

innovations in processing) can improve the reliability of recycled materials, and perhaps 

stabilize markets. 

The dimension of a level playing field between recyclables and virgin materials 

that is influenced by supply and demand may be addressed by the greater volumes 

and increased reliability of the recyclable materials encouraged by the PAYT 

system.35 If / as energy rates increase, the savings from the embedded energy 

advantages of recycled materials should also increase. However, the portion of 

any differences between recyclables and virgin materials that emanate from tax 

incentives or other policy issues cannot be solved by PAYT. (Also, national

extraction, tax policies or other strategies that make virgin materials more 

advantageous are not solved by PAYT.)

PERSPECTIVE 2: PAYT is effective at waste reduction and waste diversion but 

that is not leveling the field between virgin and recycled materials. It partially 

encourages markets by helping to increase the supply of material. In order to 

create markets both supply and demand are required. PAYT creates demand for 

less packaging, and while this is inherently a positive environmental attribute of 

the strategy it is not the same as creating a demand for recycled material. An 

 35 Assuming education and processing are both optimized to achieve a reasonably clean, market-ready 

material stream. This is not a function or issue of the PAYT system itself, however.
73

unintended consequence of packaging reduction can even be the redesign toward 

packaging reduction at the expense of recycled content.

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

Stakeholders disagree on this score. The roles and responsibilities are consistent with 

those characterizing the current system, with the possible incentive for disposers to 

contact manufacturers if they see excessive (non-recyclable) packaging costing them 

more money when they pay for trash. 

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run

The strategy can produce strong incentives, but actual performance is influenced by local 

conditions. Even in the short run, 2/3 of communities implementing PAYT see no 

increase in system costs (and all expect long run savings);

36 however that depends on 

local variables (particularly the difference between landfill and recycling costs). 

In areas where the costs will increase, they will increase less under PAYT than under 

other options. If the question is whether PAYT is cheaper than other options for 

achieving recycling (and recycling is desired, regardless of cost), then PAYT is less 

expensive. If the question is whether the recycling achieved is cheaper than landfilling, 

that varies at the local level. If there is a recycling program in place, PAYT is the 

cheapest way to improve its use (drop-off or curbside), which generally improves its costeffectiveness.37 The program does not require enhancements to infrastructure or capital 

stock (e.g., new trucks). Even if landfills are very inexpensive, PAYT’s incentives can

encourage source reduction (these tons are “zero” cost, so it lowers system costs) but the 

recycling that is encouraged may not be cheaper (in the short run), depending on local 

markets and processing. The answer to this may vary based on the local conditions 

(relative cost per ton of recycling vs. landfilling, adjusted by source reduction, etc.). 

Potential to improve the efficiency of the recycling system

The extra recycling volumes can encourage efficiencies in processing. The PAYT 

system does not get in the way of any innovations in recycling collection or processing. 

The strategy allows and can support innovations in recycling systems. PAYT lasted 

through the less efficient recycling systems relying on multiple bins in the 1980s, and 

works with dual and single stream systems today. 

 36Frable, 1994, Iowa DNR, Skumatz 1993 - 2010. 37 Skumatz, 1996, 1999, 2001, 2010, 2011.
74

Potential for cost control

The system adds little in terms of overhead, and keeps costs at a very local level –

the service provider. There is not a large statewide administration system to add 

any cost burden. PAYT encourages efficiencies in the system, as there is no 

interference with additional innovation – in trash collection, in recycling, in 

composting, etc.

4) Consistency, reach and scalability

Potential for reasonable consistency across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

PAYT is currently in place in several states and many counties. Legal and other 

restrictions may prevent passage of national legislation requiring implementation of 

PAYT. 

“Reasonable consistency” should probably not be interpreted as “uniformity.” 

Key elements to successful PAYT program include the following:

1. Recycling cost is embedded in the trash rate – no separate fee.

2. Define the recycling program standards (collection at least every 

other week, recycle at least X materials, large container (if 

possible), container provided if a container is provided for trash / 

parallel convenience, same day collection).

3. Small container option for trash that is no larger than 32 gallons, 

with increasing multiples.

4. Ability to inspect hauler records for compliance, and tonnage 

reporting by haulers, plus designation of who is responsible for 

education and a minimum frequency of outreach.38

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

Perspectives differ. Stakeholders generally agree that PAYT with embedded recycling 

can work for single family and for commercial customers. It has not yet proven to work 

well for large multi-family buildings and does not provide much of an incentive for 

away-from home recycling.

If implemented under the right conditions, the strategy can be effective – with the 

desired diversion outcomes – for the 80%++ of waste that is generated in the 

single family and commercial sectors. No city interviewed suggested holding up 

PAYT in the residential sector because it could not be well implemented in the 

 38 See sample legislation documents prepared by SERA on www.paytnow.org.www.paytnow.org. The 

document was partly funded by ABA.
75

large multi-family sector. It has shown to work well in the commercial sector, 

where laws are passed to say that trash bills must include the embedded cost of 

(some multiple of) recycling.39

Caveats / Concerns / Issues: The problems in the (large) multi-family sector are 

that generators are not the bill payers, there is anonymity if people do not comply, 

and there is much turnover in residents.

5) Ongoing performance

Potential for measurable performance data

The strategy is relatively easy to measure since collection companies can track 

performance and generate data. PAYT impacts can be assessed by measuring tons of 

trash and recycling (and yard waste, if available) pre- and post-, and/or compared to a 

control group. This can be at the household level or at the route or community level. It 

can also be measured by monitoring tons to a landfill, although that can mix the PAYT 

impacts with other potential effects. Studies thus far have indicated that PAYT not only 

encourages recycling, but also composting and source reduction / waste prevention with a 

total effect of 17%40 reduction in disposed tons.41 

Residue rates from PAYT community recycling systems deserve careful 

monitoring and study to ensure that the disposable of non-recyclable material is 

not simply being diverted to the recycling system. 

Potential to produce high-quality commodities

The strategy’s ability to contribute to production of high-quality commodities depends on 

recycling collection and processing system and on markets. PAYT produces high 

volumes of materials, and is compatible with a wide range of recycling programs –

curbside or drop-off, commingled or separated, driver sort, manual/automated/semiautomated, all kinds of containers, etc. The quality of commodities is affected by the 

design of the recycling program, the education, the quality of the processing equipment 

(and speed, extra steps installed, etc.), the attention of processing management, and other 

factors – not by the PAYT program per se. Note that the quality of processing can and 

should be influenced by the market rewards that may be associated with cleaner/higher 

quality commodities. That would provide a direct influence to process materials to 

cleaner standards. Again, this is not a factor of PAYT.

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

 39 Skumatz, 2010 40 The 17% is in addition to the recycling, etc. already happening – not total – so this is a very strong 

addition to diversion. Recycling increases 50% to 100%.

41 Skumatz et.al., Resource Recycling, February and March, 2011.
76

PAYT does not interfere with recycling processing innovations. As recycling 

rates increase, economies of scale support greater innovation and potentially 

greater returns to processors from those innovations. The strategy also does not 

interfere with improvements in recycling collection. PAYT has been 

implemented with curbside and drop-off recycling, and has been in place as 

curbside recycling technologies ranged from single and multiple bins, driver sort 

systems, automated/semi-automated/manual systems, wheelie carts, split trucks, 

etc. The program works with drop-off programs as well.

6. Overarching considerations

A) Feasibility (degree of difficulty to achieve)

PERSPECTIVE 1: Technically, PAYT is extremely easy to achieve. Politically, it is 

more difficult to establish. If political will is there, it is very easy to achieve. 

PAYT systems (bags, tags, cans, billing system, setting rates, etc.) are very 

straightforward. Small haulers, large haulers, municipal collection, urban, rural, 

islands, etc. have all managed PAYT systems. The negatives are easily managed 

if there is a champion and/or political will on the part of the community. Studies 

indicate that six months after the beginning of implementation, 89-95% of the 

affected population prefers the new system and would not like to go back to the 

old one.42 Getting political approval and weathering similar types of 

implementation issues that attend any program change are the hurdle.

Small haulers have expressed concerns with the strategy, since purchase of containers can 

be a hurdle for them. However, PAYT can also be achieved with low-cost bag or tag 

programs, bags in cans, and other options. The word “Pay” (in Pay-As-You-Throw) 

may also pose a barrier. A new name – that is as self-explanatory – may be helpful with 

the public (save as you throw, etc.). If a city currently provides service through tax 

payments, it may be more acceptable to residents if they “line item” the fee for a year or 

two so community members understand they have been paying for service, and then pull 

it out into a separate fee. It is even better to actually pull the fee out of the taxes.

PERSPECTIVE 2: It is a simple and straightforward matter to send out one annual tax 

bill. Creating a monthly municipal billing system for trash can become very complex, 

especially in areas of housing density where trash generation by household is not 

discretely measurable for billing. This billing challenge remains unresolved in many 

typical household settings, specifically multi-family and institutional settings, and 

settings where trash pickup does not occur at the household level. In some jurisdictions it 

is illegal to include a line item discussion on tax bills. Also many local jurisdictions are 

constrained in their legal ability to assess fees, or convert a tax to a fee.

B) Degree of impact (high, medium or low) on present challenges with financing of 

recycling of municipal solid waste

 42 Skumatz, 1994- 2010
77

PERSPECTIVE 1: This can serve as a simple, straightforward strategy for

financing recycling. The strategy is self-funding; users pay, and pay in better 

relationship to their use of service. Residents may find the associated cost more 

acceptable if they see it as a “line item” for a year.

PERSPECTIVE 2: This strategy will have a low impact on the current financing 

problem, as PAYT constitutes status quo in many areas. Seven thousand

communities already utilize PAYT and still face problems with sustainable 

funding. PAYT has very little to no impact on recycling problems found in 

multifamily, away-from-home, event or commercial contexts as it cannot be 

adapted to those settings.

Not every jurisdiction has the legal ability to create line item tax bills or line item 

fees in lieu of taxes. There are huge legal differences between taxes and fees,

especially with respect to collection, delinquency and legal feasibility. 

However, PAYT can be an important incentive for a robust recycling program to have in 

place.

C) Characterization of likely cost in relative, qualitative or quantitative terms

PAYT is a cost-effective way to increase recycling, achieve source reduction, and 

achieve overall diversion – arguably cheaper than other standard options. It is also 

cheaper than most other ways of achieving greenhouse gas reductions. 

Surveys in two states found that PAYT led to no system cost increase in 2/3 of the 

communities in which it was implemented, with a share of those experiencing a 

cost decrease.43 For GHG reductions PAYT is cheaper per metric ton of carbon 

equivalent (MTCE) than even energy efficiency and renewable energy options. 

The actual cost will depend on the cost and efficiency of the system the 

community or hauler is starting with, and the choice of the type of PAYT system 

they are going to. This could use more study.

 43 Skumatz 1993-2010
78

D. Tax-payer Funded Strategies 

Taxpayer-Funded

Taxpayer-funded strategies, together with subscription services (see above) comprise the 

overwhelming majority of community recycling programs in the United States. 

Therefore, taxpayer-funded strategies are likely to be a financial foundation of recycling 

systems for the near to mid-term in most jurisdictions. This section highlights the 

strengths and weaknesses of taxpayer-funded financing. 

1) Financial sustainability

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources 

Under normal circumstances, and particularly in periods of economic expansion 

or peak, taxpayer-funded strategies can provide sufficient funding for the current 

outcomes of municipal recycling of packaging. However, during periods of 

economic contraction, taxpayer-funded strategies are less likely to provide 

sufficient funding as budgets are debated and limited resources re-prioritized. 

Furthermore, taxpayer-funding has not been shown to be easily adaptable or 

responsive to new needs in the recycling system.

Potential to make a significant contribution to a long-term solution

Most community recycling programs are currently funded by one form or another of 

taxpayer financing. Hence, taxpayer financing can continue to make a significant 

contribution to a long-term solution, though the success of programs (e.g., recycling 

rates) would be enhanced if supplemented with additional financing sources/strategies. In 

the current economic climate, administrators of programs around the country are facing 

increasing financial pressure. Raising additional tax dollars to fund recycling will be 

viewed as a tax increase and therefore is politically challenging.

Potential to avoid escheats /assure that funds are used for the intended purpose

Taxes collected for recycling can be diverted to other needs.

2) Value chain, communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

Taxpayer financing does not provide a feedback loop to consumers. When waste 

management costs are contained among other line items in the tax bill and therefore not 

transparent, citizens tend not to recognize that they are paying the costs. When costs of 

landfilling and recycling are not separated, there is no incentive for the consumer to adopt 
79

one behavior over the other. Similarly, taxpayer financing of recycling for packaging 

does not provide a feedback loop to producers because the costs are remote and 

associated with the public at large. Thus, there is no financial incentive to influence 

packaging design (i.e., source reduction, material choice, design for recyclability). 

Disposal is often a cheaper option for government operated taxpayer-financed programs. 

Therefore, taxpayer-funded recycling is accompanied by restrictions on landfilling of 

recyclable materials in some jurisdictions.

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

Taxpayer financing may only incentivize consumers when the tax or fee structure is 

transparent, as when the costs of disposal and recycling are each disclosed on an itemized 

tax bill. Otherwise, the cost signals are very indirect, and do not provide a direct 

incentive to consumers to reduce waste or increase recycling.

Potential to influence consumer behavior in needed ways

As typically implemented, taxpayer funding of recycling does little to influence behavior. 

The greatest potential to influence consumers comes when there is complete transparency 

of the tax structure and taxpayers become sensitive to cost containment (e.g., they recycle 

more and discard less in order to reduce their tax burden), or to maximizing the 

environmental benefits of recycling. 

Enhanced communication is needed to educate and incentivize consumers short of these 

economic stimuli. However, it would be difficult to raise taxes to support consumer 

education in traditional ways.

Potential to improve recycling rates in the U.S.

Current taxpayer-financed recycling programs in many parts of the country are viewed as 

underperforming. However, since some communities do significantly better than others, 

overall recycling rates could be improved if best practices were shared and emulated.

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

In the absence of independent feedback loops this strategy has little potential to 

incentivize innovations in packaging design.

Potential to foster innovation in processing technology

Some communities do invest in or contract for processing and may drive for improved 

technology over time.
80

Potential to establish a level playing field between recyclables and virgin materials / 

Encourage markets for recycled materials

This strategy could not achieve this in isolation. Other strategies need to be implemented 

to influence materials pricing.

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

Proactive steps among stakeholder to create feedback loops would need to be taken. The 

strategy in and of itself does not drive this.

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run 

The strategy does not have a direct impact on efficiency and cost; however, with budget 

pressures across the country, there should be ample incentives to find efficiencies, 

consolidate systems, optimize operations and lower overall costs.

Potential to improve the efficiency of the recycling system

Potential for improvement will not come directly from the taxpayer-funded financing 

strategy, but could come from taxpayer pressure to find efficiencies, consolidate systems, 

optimize operations and lower overall costs (see above).

Potential for cost control 

To date, existing systems have had limited ability to control costs.

4) Consistency, reach and scalability

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

Theoretically communities can share best practices and consolidate services. EPA and 

state governments can support such efforts and encourage consistency by setting 

standards and providing guidelines. To date, however, there is little consistency across 

jurisdictions. 

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

While this strategy has the potential to accommodate the full array of consumers, to date 

most taxpayer-funded systems have not achieved the desired breadth of service.
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5) Ongoing performance

Potential for measurable performance data

Meaningful data is surprisingly lacking at this time, but it should be possible to generate 

data (perhaps as part of required state reporting), and link those data to best practices 

(total tons diverted, cost/ton, etc.).

Potential to produce high-quality commodities

Community recycling programs which are taxpayer-financed result in significant 

variability in their ability to produce high-quality commodities. This is, in part, due to the 

differences in collection and processing technology and education and outreach, all of 

which are factors influenced by available financing. 

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

Taxpayer funding will not drive recycling system improvements on its own.

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials 

Taxpayer-funding supports the majority of community recycling in the U.S., either 

through direct tax levies, or through subscription services (ratepayer-funded). Hence, 

there is widespread acceptance of this funding mechanism at present. 

Political feasibility

Taxpayer financing is the status quo and waste management – of which recycling is a part

– is traditionally viewed as a public service fundamental to public health, and worthy of 

public support. However, many recycling programs are being cut.

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

Since taxpayer-financed recycling is currently in widespread use, it would not introduce 

additional complexity.
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B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

Continuing taxpayer-funded recycling as it currently exists falls short of addressing 

present challenges in increasing recycling rates and recovering commodities. 

C) Characterization of likely cost in relative, qualitative or quantitative terms

Many or most programs could continue at current expenditure levels, with the 

expectation of similar performance results. However, given the current economic 

situation, some jurisdictions are cutting their recycling programs.
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Tax Credits or other Financial Incentives

Tax credits for natural resource industries (e.g., oil, timber, mining) are a legacy of the 

drive to promote resource development and westward expansion. These subsidies remain 

law even though they are no longer relevant to their original intent. According to the 

National Recycling Coalition:

“The system-wide impacts of the subsidies impede the shift away from an 

extractive-based economy to a more sustainable materials economy. 

Subsidies have the effect of artificially lowering the price of virgin 

materials and disposal, which negatively impacts recycling. When a 

subsidy to the receiving company is not passed on to the consumer as is 

sometimes the case in non-competitive situations, the subsidy increases 

the company’s profitability and ability to attract investment. While the 

elimination of these subsidies is an important first step, their 

elimination alone will not guarantee an improvement in the market 

demand and prices paid for recovered materials.”44

There have been significant changes in the global economy over the past decade that may 

significantly impact the viability of this strategy. 

• There is now much more offshore extraction/production (than the time period of 

the study) that does not necessarily benefit from U.S. tax code. Hence, 

elimination of tax credits may not be enough to affect overall cost structure.

• As the supply of oil continues to decline and the price per barrel continues to 

increase, the relative impact of the tax credit on the overall commodity price is 

lessened.

There are two options to this strategy. One option is to eliminate the existing tax credits 

to the extraction industries. The second option is to create an offsetting tax credit for the 

recycling industry that will level the playing field. The impacts of this second option are 

more difficult to identify as the offsetting credit could take many different forms. Several 

states have already passed legislation designed to incentivize recycling infrastructure and 

encourage investments in recycling. A list of these existing incentives and a 1998 report 

on the use of tax credits by state can be found at 

http://www.epa.gov/osw/conserve/rrr/rmd/bizasst/tax-ince.htm. Another form these 

credits could take is in the area of greenhouse gas emission reductions. It is well 

established that recycling reduces greenhouse gas emissions, and if a cap and trade 

system or other incentive programs were implemented, the recycling industry and those 

who use recycled content materials would be in an advantageous position to capitalize on 

those opportunities. 

 44 The National Recycling Coalition, “Leveling the Playing Field for Recycling: A Policy Report on Virgin 

Material Subsidies.” (September 1999).
84

The impacts of these two options vary; hence some of the following sections address both 

the tax credit elimination option and the creation of an offsetting recycling credit. In 

those instances, tax credit elimination is presented first and the creation of an offsetting 

recycling credit is presented second. 

1) Financial sustainability

Potential to provide reasonably secure, sufficient, stable and ongoing 

financial resources 

Tax credits will not provide secure or stable financial resources. They do not 

provide direct funding to recycling programs. An indirect impact may occur if the 

value of the materials collected by the programs increase thereby reducing the net 

costs of the overall system. 

Potential to make a significant contribution to a long-term solution

If the tax subsidies are eliminated or if new tax credits for recycling infrastructure 

are implemented, the value of recycled materials may increase and recycling 

infrastructure could be expanded, but neither is likely to do so to the point where 

they become a significant offset to the costs of running collection programs. 

Potential to avoid escheats /assure that funds are used for the intended purpose

Not applicable to this strategy.

2) Value chain, communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

The elimination of tax credits may result in an increase in the costs of virgin materials 

and perhaps encourage greater use of recycled content materials. The strategy will have 

no impact on waste collection. 

Tax credits for new recycling infrastructure can expand recycling capacity and result 

ultimately in more materials being recycled but at best only provides an indirect feedback 

loop encouraging the use of more recycled materials. 

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

There would be no transparent cost signals under this strategy. Costs would be based on 

the relative cost of virgin materials to recycled materials, the suitability and availability 

of the materials, and the degree to which cost increases can be passed along to 

consumers. 
85

Potential to influence consumer behavior in needed ways

Eliminating tax credits could result in increased costs of virgin materials and greater 

market value of recycled materials. If higher virgin material costs are not able to be 

passed on to the consumer or if manufacturers switch to more recycled content because it 

is more cost-effective, consumers will be incentivized to buy products using recycled 

content packaging. 

Expanding recycling infrastructure may expand the amount and range of materials that 

can be effectively recycled in a given area which may in turn result in consumers 

diverting more recyclable materials. 

Potential to improve recycling rates in the U.S.

Eliminating tax credits will not impact recycling rates directly.

Tax credits for recycling infrastructure have the potential to improve recycling rates by 

expanding the range of materials that can be recycled or by increasing the capacity to 

recycle more materials. 

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

The strategy may encourage greater use of recycled materials for packaging by making 

virgin materials more expensive. 

Recycling infrastructure tax credits have not been shown to incentivize packaging design 

where they exist. 

Potential to foster innovation in processing technology

Eliminating tax credits has no impact on processing technology. 

Tax credits for new recycling infrastructure has the potential to spur innovation in 

processing technology. 

Potential to establish a level playing field between recyclables and virgin materials / 

Encourage markets for recycled materials

The primary strength of both strategies is their potential to level the playing field and 

boost markets. Eliminating the tax credits for natural resource extraction will have a 

more direct effect than establishing tax credits for increased recycling infrastructure. 
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Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

Neither strategy has an impact on the allocation of roles and responsibilities across the 

value chain.

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run 

The elimination of tax credits will not have an impact on system efficiencies but it may 

reduce overall system costs if the value of recycled materials rose as a result.

Tax credits for recycling infrastructure have the potential to improve efficiencies if new 

or more efficient processing technologies are utilized which may have the effect of 

reducing costs.

Potential to improve the efficiency of the recycling system

As stated above, the elimination of tax credits will not have an impact on system 

efficiencies, but tax credits for recycling infrastructure have the potential to improve 

efficiencies.

Potential for cost control 

Eliminating tax credits will have no impact on cost control

New tax credits for recycling infrastructure may have slight impacts by enabling 

processors to buy new or more efficient equipment. 

4) Consistency, reach and scalability

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

Existing tax credits are federal law and their repeal at the federal level would provide 

consistency across jurisdictions. The impact of the repeal on recycled material market 

values may not be consistent across jurisdictions as other factors such as collection. 

Recycling infrastructure and availability of local markets will be significant factors 

influencing those values.

Establishing new tax credits for recycling infrastructure has the potential to be applied 

consistently if established at the federal level. However, attempts to do this have not 

been successful and have resulted in multiple state programs which are not consistent. 
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Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

Not applicable to this strategy.

5) Ongoing performance

Potential for measurable performance data

The value of recycled materials could be easily tracked but there are other factors that 

also affect market value. It would likely be difficult to separate these impacts in order to 

isolate the effect of eliminating the tax credit. 

New recycling infrastructure put in place as the result of tax credits can be tracked. 

Potential to produce high-quality commodities

Not applicable to eliminating existing tax credits.

New recycling infrastructure is likely to lead to higher quality commodities if newer 

processing equipment is utilized as a result of the credits. 

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

Elimination of existing tax credits would have little direct impact on recycling system 

technology

Recycling system technology maybe impacted if the quantity of recycled materials 

increases substantially as a result of the strategy. New tax credits would accelerate the 

implementation of new recycling system technologies. 

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials 

Eliminating existing tax credits is likely to be strongly opposed by the resource extraction 

industries which are politically powerful at the federal level. Therefore, it is unlikely that 

this strategy can be implemented. 

Implementing tax credits on recycled commodities or infrastructure would likely meet 

with less resistance, other than that of limited budget flexibility to provide tax credits in 

this economy.
88

Political feasibility

For reasons stated above, it is unlikely eliminating existing tax credits could be 

implemented. Implementing tax credits on recycled commodities or infrastructure would 

be more politically feasible but difficult in this economy..

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

There will be little if any complexity for producers, retailers or consumers from 

implementing this strategy.

B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

The strategy would likely have a low to medium impact depending on the magnitude of 

increases in the market value of recycled materials or the number of businesses who take 

advantage of the tax credits to invest in new recycling equipment or infrastructure. 

C) Characterization of likely cost in relative, qualitative or quantitative terms

According to the 1999 NRC study, the subsidies to extraction industries range between 

$510 and $640 million annually. 

According to the 1998 article by Kathern Sparks in Resource Recycling:

45

• Idaho gave $14,095 in credits for its post-consumer waste credit 

program for the 1996 tax year. 

• In Montana, the investment credit program gave $219,611 in credits to 

10 taxpayers for the fiscal year ending in June 1996. For the following 

fiscal year, $230,031 in credits was given to 15 taxpayers.

• In New Jersey, from October 1987 through December 1996, a 

corporate business tax credit was given to 300 businesses, taking 

advantage of $146 million worth of certifications (value of eligible 

equipment). 

• In Oregon, for the state’s three programs combined, nearly $139 

million in project costs have been approved to receive credit. 

• California’s franchise tax board estimated that $2,127,816 were 

claimed for the credit from 1989 to 1993, not including unused credit 

rolled forward to subsequent years.

• In other cases, almost no firms take advantage of the break. 

• New Mexico’s credit has been used by very few firms, although this 

could be due to the investment and job creation standards.

 45 Sparks, Kathern. "Tax Credits: An Incentive for Recycling?" Resource Recycling July, 1998.
89

• Colorado, Kansas and North Dakota all had tax incentive programs 

that were rarely used. 

Note: Efforts were made to locate any existing follow-up studies quantifying the 

financial or recycling outcomes from the use of these credits. However, no such 

literature was found. 
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Federal Funding for Recycling Infrastructure

This strategy envisions a scenario in which Congress funds a program to improve

MSW/recycling infrastructure (i.e., collection, processing, end-markets etc.). While there 

are not examples of such programs specifically in this realm, one could look to other 

sectors in which states and localities apply for grants for investment in infrastructure and 

technology – in this case, to facilitate recycling infrastructure. Such a program would be 

funded by taxpayers and managed by government.

1) Financial sustainability

Potential to provide reasonably secure, sufficient, stable and ongoing

financial resources 

If funding for this strategy can be secured once and proven successful, then it 

could be become secure and stable over time. Federal funding of many 

government programs has constituted some of the most secure and stable funding 

streams, particularly for infrastructure programs like transportation and drinking 

water. However, transportation and drinking water funding, while stable, is often 

insufficient to meet needs. Also, the feasibility of this strategy is its greatest 

challenge (see Feasibility section below).

Sufficiency may be another matter. Federal funding is rarely adequate for any 

program, but it could be an improvement in some areas.

If funding comes via a grant program, it is widely noted that applying for and 

administering federal grants has many challenges and costs. 

Potential to make a significant contribution to a long-term solution

The contribution of this strategy to a long-term solution is unclear. Taxpayers 

fund most recycling in this country already, albeit at state or local level. While it 

seems unlikely that federal funding would ever supplant these current revenues 

and provide full funding for an integrated system, if it ever came to that level, it 

could serve as a financial premise.

If funding is provided via grants, federal funding can provide uniformity to 

programs, including materials collected and outreach, as a condition of grant 

approval, and leverage the power of large-volume purchasing for infrastructure 

development and equipment purchases. It should be recognized that federal grant 

systems can result in limited eligibility and increase administrative costs.

Additionally, the need to coordinate with every local government that currently 

has some level of decision-making authority over the solid waste collection 

system will create a significant barrier to uniformity at this time. 
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Potential to avoid escheats /assure that funds are used for the intended purpose

The basis of this strategy assumes that funding is being directed for a specific purpose. 

Clearly the level of funding or the requirements around its use could change, but the 

purpose should remain the same.

2) Value chain, communication and action

Potential for feedback loops across the system (e.g., product design, waste collection, 

after-market channels) to resolve current market disconnects

This funding system alone won’t create feedback loops. Incentives and disincentives 

could potentially be built into the system to encourage this feedback. For example, under 

a grant-based system, approval could be made dependent on creation of feedback loops to 

multiple stakeholders like outreach to consumers, design/material interactions with 

manufacturers and market development activities, as well as incentives to change 

consumer behavior and to reward high-performing systems. Such requirements are likely 

to increase administrative costs however.

Funding could be available to non-governmental entities, including private service 

providers, private material recovery facilities and manufacturers. Depending on the 

design of the grant program, additional feedback loops may be possible.

Potential for effective consumer incentivization (through transparent cost signals or 

other means)

This strategy does not directly incent consumers. However, incentives could potentially 

be built into a grant-based system through grant requirements. For example, if new 

funding becomes available, it can be directed first into systems that provide effective 

incentives to consumers that alter both purchasing and recycling behaviors (see the 

separate assessment on Incentives).

Potential to influence consumer behavior in needed ways

This potential is unclear. Incentives and disincentives can be built into a grant-based 

system to encourage appropriate behavior as requirements of grant awards, which, in 

turn, has the advantage of encouraging behavior that will be widely accepted across the 

U.S. – an important consideration in our mobile society.

Potential to improve recycling rates in the U.S.

If designed to do so, federal funding for recycling infrastructure can pay for better 

infrastructure, drive market development, harmonize programs, and create incentives and 

education for consumers, all of which are proven to increase recycling rates. It can also 

be designed to prioritize activities that significantly increase overall and material specific 

recycling rates. 
92

However, it may be more challenging for this strategy to “raise the bar” and drive 

improvements in communities with higher-functioning recycling programs, especially if 

grant funding favors those communities that demonstrate the greatest need for 

improvement.

Potential to incentivize innovations in packaging design (e.g., recyclability, 

minimizing full life-cycle costs, light-weighting, general end-of-life management)

This strategy has limited potential to incent innovations in packaging design.

Potential to foster innovation in processing technology

Federal funding could be designed in a way to foster innovation. For example, 

technology innovations could be given incentives over older technology.

Potential to establish a level playing field between recyclables and virgin materials / 

Encourage markets for recycled materials

The potential of federal funding against this criterion is unclear. Market development for 

recycled materials may need to be managed separately (i.e., privately) from funding of 

municipal recycling systems.

Potential for allowing clear recognition and allocation of roles and responsibilities 

across the value chain

Government would continue to provide its leading role under this strategy.

3) Efficiency and cost control

Potential to operate efficiently and reduce total system costs in the long run 

As this strategy addresses only infrastructure, and not the total system, its potential effect 

on overall system efficiencies and costs is unclear. However, proper incentives and 

disincentives built into the funding stream could help. For example, if funding is 

prioritized for improving or creating efficient infrastructure, it can reduce costs. 

Transition from inefficient to efficient operations can be prioritized in funding. New, 

efficient operations would be funded next. Inefficient operations can be targeted. If the 

funding is not designed to gain efficiency and control costs, there is no reason to 

anticipate that it would succeed in this area. Evaluation of the current efficiency of each 

system would add significantly to the administrative costs of the program as well.

Potential to improve the efficiency of the recycling system

At first glance it is not evident how federal funding would improve efficiency, but with

proper design and engagement by all parties, advances could be made. For example, 
93

subsequent grant funding could be made contingent on meeting performance and 

efficiency standards, or making efficiency improvements (being accountable for taxpayer 

dollars). 

Potential for cost control 

Proper design and engagement by all parties holds the potential for cost control. While 

there are examples of federal funds not being used in the most efficient manner, other 

programs, such as the federal WIC program which provides funds to states and allows 

states to administer programs, are routinely cited for their efficiency. However, these 

programs benefit from the ability of the federal government to establish program 

guidelines applicable to all states. Conversely, solid waste systems are managed at the 

local government level and therefore will require a significant amount of coordination 

and outreach.

4) Consistency, reach and scalability

Potential for consistent implementation across jurisdictions (municipality to 

municipality, state to state, and region to region) / extension nationwide

Consistent implementation would be possible only if funding levels were adequate to 

support all communities. Also, if grant funding is awarded on a competitive basis to 

communities that demonstrate the greatest need, communities with lower-performing 

recycling programs are likely to receive a disproportionate amount of funding, to the 

detriment of other communities with a lower perceived need.

Potential to reasonably accommodate the full array of consumers (e.g., single family 

homes, multi-family dwellings, commercial and away-from-home sources, and 

underserved communities) 

PERSPECTIVE #1. This strategy can accommodate the full array of consumers as

funding would likely be tailored to each locality’s needs

PERSPECTIVE #2. This finance strategy addresses infrastructure and end-market 

improvements. Hence, it does not directly provide a solution for multi-family, 

commercial, and away-from-home recycling, but it could potentially help if markets were 

stronger. 

5) Ongoing performance

Potential for measurable performance data

Performance data requirements could be built in as a component/requirement for 

receiving funds.
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Potential to produce high-quality commodities

As with other criteria noted above, performance standards could be tied to funding, using 

some market measure of high-quality commodities (e.g., market revenue as a possible 

measure). 

Potential for sufficient flexibility to allow for improvement of recycling system 

technology

System technology improvements could be targeted in turn for funding to support flexible 

approaches for technological improvement.

6) Overarching considerations

A) Feasibility (degree of difficulty to achieve) 

Potential for support (or lack of concerted opposition) from consumers, retailers, 

brand owners, and elected officials 

This is the biggest challenge of all for this strategy. With a concerted effort by all parties, 

a credible argument can be made. Available data (quoted earlier in this paper) 

demonstrates that using recycled inputs conserves energy over using virgin inputs, 

reduces greenhouse gas (GHG) emissions, can serve as an extremely cost-efficient GHG 

abatement strategy.46 These studies indicate that sizeable, critical investments in 

recycling can be made at a fraction of the cost of many other federal programs. 

Political feasibility

Current economic and political conditions present many challenges to advancing this 

strategy. In order to make some headway in doing so, it would need to be preceded by 

agreement by all parties to pursue the strategy in coordination with each other. If such an 

agreement can be achieved, then federal funding could at least be pursued.

Avoidance of undue complexity for producers, retailers and consumers in 

implementation

This system avoids all those complexities. However, if not structured properly, it could 

add many complexities to government.

B) Degree of impact (high, medium, or low) on the present challenges with 

financing recycling of municipal solid waste 

With high coordination among key constituencies and effective implementation, chances 

of addressing present challenges improve. If there is not coordination and effective 

implementation, chances decline. 

 46 McKinsey & Co, “Pathways to a Low-Carbon Economy; Version 2 of the Global Greenhouse Gas 

Abatement Cost Curve”, January 2009. http://globalghgcostcurve.bymckinsey.com/
95

Also, there may be potentially lower impacts in communities with pre-established highfunctioning programs.

C) Characterization of likely cost in relative, qualitative or quantitative terms

An estimate of costs can be made using the following formula:

• Assess efficiency of current U.S. infrastructure.

• Determine target recycling rate by material and sector.

• Assess required collection, transportation, and processing infrastructure to meet 

target rates, as well as educational requirements and incentives to ensure high 

participation, and related costs of improvements to achieve target rates.

• Assess cost of improving each current inefficient MRF and cost of building new 

MRFs to meet increased demand under target rates.

• Add up costs for each refurbished or new MRF.

• Add up costs for each collection, transportation, education and additional system 

improvement (not already captured in MRF improvements).

• Total will equal the Total Estimated Cost of a Federal Program that builds on 

existing recycling programs and existing financing of those programs. This does 

not address funding to maintain existing programs and infrastructure, which is 

known to be an issue in many communities.
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Possible next steps on sustainable financing

Several participants in the dialogue proposed that additional multi-stakeholder analysis 

and discussion of the public and private financing systems be undertaken to improve the 

performance of recovery and recycling of packaging and printed paper in the U.S. The 

objective of the proposed initiative would be to further analyze the financing options that 

are most likely to achieve the objective of sustainable financing of recycling at the 

municipal level in the United States. 

Advocates for the proposal, especially participants from state and local governments and 

NGOs, expressed dissatisfaction with the fact that the depth of analysis on the financial 

strategies was limited by time and resource constraints. They believe that further crosssector dialogue is necessary to identify and refine the most promising strategies for 

establishing sustainable means for financing and governance of the system. Some 

participants, notably a majority of participating brand owners, voiced concern that the 

late emergence of the proposal (toward the end of the final in-person meeting) did not 

permit adequate time for joint deliberation and full understanding of its implications.

The initial version of the proposal, discussed briefly by the full participant group, 

recommended a dedicated focus on EPR. In response to concerns about that exclusive 

focus, a subsequent, more broadly scoped iteration was developed following the meeting 

and discussed by a small, cross-sector committee. The second version suggested the 

following lead alternatives for further analysis: a privately funded system similar to – or 

based on principles of – EPR, and 2) a combination of public and private funding 

sources, recognizing that participants in such an effort may choose to further develop or 

refine the list of scenarios.

The twin purposes of the continued analysis would be to strengthen understanding of the 

potential of each for achieving the objective of sustainable financing, and to articulate 

best case scenarios for each financing option identified. This analysis would: 

• Compare and analyze each approach for financing the recovery and recycling of 

packaging and printed materials based on the following components:

o Economic efficiency (including but not limited to how costs are allocated 

throughout the material’s lifecycle and the resulting impact on cost 

containment)

o Performance (including but not limited to how the approach enhances the 

overall environmental performance of the system)

o Stakeholder roles (including but not limited to how the contemplated roles 

for the players along the chain support or detract from system efficiency 

and performance)

o Feedback loops which stimulate participation at each level of the system 

(including but not limited to whether the approach provides sufficient 

information to engage all players along the chain in a proactive fashion)
97

o Use of fees or other financing mechanisms (including but not limited to 

how the specific financing mechanism influences other components of the 

system, and the relative merits of visible and invisible fees)

• Develop a clear understanding of the various implementation scenarios including 

individual versus collective responsibility approaches. 

• Distinguish aspects of each approach which best accommodate the objective of 

sustainable financing of recycling of packaging and printed papers in the near 

term (less than five years) and long term (five years or beyond)

• Agree on key terms and definitions of all programs within the targeted system 

scenarios for packaging and printed paper, including:

o Cost internalization (as it relates to EPR finance systems)

o Eco-fees (as the relates to EPR finance systems)

o Subscription services

o Pay-as-you-throw or variable pricing strategies

• Examine the implications and attributes of the various financing mechanisms, 

including how the costs would be apportioned across the product chain. 
98

IV. Strategies for Optimizing the Current System

Introduction

In an effort to optimize the U.S. materials management system for the recovery of 

packaging materials for recycling, a list of opportunities was created and eight key 

drivers for system performance improvements were selected for further work. It is vital 

to understanding this process that these eight drivers be seen as an interconnected whole, 

requiring feedback loops among the projects to achieve synergies where possible and to 

avoid unintended consequences of divergent work-streams. The project briefs contained 

in this document represent a review of each key driver. Determining the mechanisms for 

proceeding with actionable projects will be a major next step.

Summary Recommendations

1. Package Design and Material Recovery:

The EPA dialogue participants recommend a project to address the integral relationship 

between package design and material recovery for recycling. Packaging that is designed 

for the environment and end of life is a fundamental requirement for an effective and 

efficient recovery / recycling system. The objective of this project is to provide package 

designers with information that will enable material recovery. Project deliverables 

include:

1. Identify existing design for recycling guidelines that are material specific –

examples of organizations with guidelines and other data include:

a. Association of Post-Consumer Plastics Recyclers 

b. The Sustainable Packaging Coalition 

c. ISO

d. ISTA

e. Others as identified

2. Identify gaps in available resources (e.g., materials or types of packaging not 

covered).

3. Propose a feedback loop that will provide for recycler and designer collaboration 

at project initiation.

4. Identify paper and packaging materials and formats that are most significant in the 

U.S. municipal solid waste stream by weight and environmental relevance.

5. Identify material and format trends in U.S. municipal solid waste that may not be 

significant in terms of weight or environmental relevance today, but that are 

growing in importance and are underserved by existing collection and recovery 

for recycling infrastructure. 
99

2. Recycling Incentives:

The EPA dialogue participants believe increasing participation in curbside and drop off 

recycling programs will increase recycling rates, revenues, and ultimately serve to 

optimize the performance of the material recovery system. Therefore, the work group 

recommends a project that would:

1. Identify recycling incentive programs for curbside and drop off recycling 

programs that have been proven to increase participation and maintain 

material quality.

2. Identify relevant enablers and barriers to successful implementation of 

effective programs.

3. Recommend potential strategies to facilitate broader implementation of 

effective programs.

While not a stated objective of this project, it is our belief this report could form the 

foundation for collaborative, multi-stakeholder efforts to expand the use of proven 

approaches and also address the potential use of incentives for non-curbside recycling.

3. Consumer Education:

The EPA dialogue participants believe that ongoing consumer education and sustained 

high levels of consumer participation would optimize the performance of the recycling 

system. The dialogue participants recommend the following projects to broaden 

recycling behavior with a focus on developing a “national norm” for recycling behavior 

while recognizing that specific “how to” education cannot be developed until and unless 

infrastructure and jurisdictional policy harmonization occurs. This project would focus 

on:

1. An assessment of how various approaches to messaging, including attributes and 

frequency, will increase consumer recycling behavior and motivation.

2. An assessment of how synergies might be created through multi-stakeholder 

messaging.

3. A demonstration via pilot campaigns in representative test markets with 

established recycling metrics.

4. A financial analysis of the levels of ongoing investment in consumer education 

necessary to create and sustain high participation.

5. A recommendation of options for financing the necessary levels of investment 

that would guarantee effective consumer education.

4. Material Collection:

The EPA dialogue participants believe the current recycling collection system needs 

improvement to optimize and improve material recovery. The group recommends a 

project to establish the highest level of knowledge on the performance of current systems. 

The project would:

1. Publish an authoritative report for broad use on opportunities to improve current 

infrastructure and collection practices in terms of capabilities and access.
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2. Identify gaps in access to collection – addressing both at home and away-fromhome issues - and shortfalls in the effectiveness of existing collection operations.

3. Explore the relationship between the collection system and the capabilities of the 

processing infrastructure as related to packaging and printed materials.

4. Assess and recommend greatest areas of opportunity to close gaps, including:

a. Resources needed to address gaps

b. The level of necessary financing

c. Recommendations on potential sources of financing.

5. Material Sorting:

The EPA dialogue participants believe that improvements to the material sorting system 

in the United States would help optimize recycling performance. The group recommends 

that a specific project be undertaken to address material sorting, including:

1. An assessment of the current sortation infrastructure and its performance.

2. An identification of interventions that could improve the performance.

3. A characterization of necessary investments associated with those interventions.

4. A recommendation of financing strategies to implement the interventions.

5. Define “gold standard/best in class” for existing systems along with strategies to 

bring others up to that standard

6. Also define opportunities to “raise the bar” on current best in class along with 

strategies to execute.

6. Aftermarkets: Exchange Resource for Recovered Packaging Materials:

The EPA dialogue participants believe there is a need for a better system to link 

recovered materials back to uses in packaging and other products. The group 

recommends a project to investigate development of an online, reliable and continuously 

managed database of recovered and/or processed materials for recycling into packaging 

or other uses. The project would: 

1. Improve access to materials, facilitating increased recycled content in packaging 

which in turn should drive market demand and incremental value for recovered 

materials.

2. Create markets for recovered materials which may provide for more diversity of 

materials recovered for new uses.

3. Increase market visibility for packaging-suitable materials that are being included 

in an increasing number of municipal recycling programs (e.g., polypropylene) 

which should allow for faster collaborations between raw material supplier and 

end users.

4. Drive better quality and economics for recovery/recycling by facilitating more 

transparent supply/demand information.

If successful, the project has potential to be expanded at a later date to include additional 

industry sectors for market development (e.g., plastics recycled to automotive and textiles 

sectors, etc.) which should further improve the financial picture for recovery/recycling.
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7. Recycling Rate by Material Type

The EPA dialogue participants believe that the development of consistent, transparent, 

and broadly-supported data on material recycling rates for specific commodities would 

provide critical information for improving recycling system performance. The group 

recommends a project that will:

1. Provide a national survey to identify potential sources of data

2. Assess data quality

3. Recommend a process for an improved materials recycling rate measurement 

system. 

The project will address at least 80% of all paper and packaging materials in major 

converted form, by weight, in U.S. municipal solid waste. It will access trade association 

production/export/import data in combination with MSW generation data and/or U.S 

Department of Commerce data. Other data sources may also be relevant.

Engagement with stakeholders who are already conducting material-specific recycling 

rate analyses is a requirement. Part of the project will be to identify gaps where data is 

missing or data collection infrastructure is not in place. The project will also address 

redundancies in current data and data collection processes. The project may also provide 

a platform for addressing the opportunities to improve EPA’s Waste Characterization 

Study and to better align EPA’s process with private sector measurement efforts.

8. System Decision-Making 

The EPA dialogue participants believe that a significant challenge to optimizing the 

system is the diffuse and disaggregated nature of decision-making around the system. 

The group recommends a project that will evaluate and model the recycling decisionmaking framework and process in the U.S. and identify activities that improve decisionmaking in ways that optimize the system.
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Optimization Project Details

1. Package Design and Material Collection/Recovery

Objectives The lack of coordination between the selection of packaging 

materials and the design of packaging with existing end of life 

collection and recycling systems has been identified as significant 

challenge to the economics and effective recovery of post-use 

packaging materials. The objective of this work stream is to 

identify existing resources that identify what materials and design 

elements pose a challenge to either the collection and/or the 

effective recovery of paper and packaging materials

Project Summary Packaging that is designed for the environment and end of life is a 

fundamental requirement for an effective and efficient recovery 

system. The objective of this project is to provide package 

designers with information that will enable material recovery. 

Project deliverables are:

• Identify existing design for recycling guidelines that are 

material specific – examples of organizations with guidelines 

and other data include:

o Association of Post-Consumer Plastics Recyclers 

o The Sustainable Packaging Coalition 

o ISO

o ISTA

o Others as identified

• Identify gaps in available resources for design guidance.

• Propose a feedback loop that will provide for recycler and 

designer collaboration at project initiation.

• Indentify ways in which designers can be incentivized to follow 

the recognized, published guidance.

• Identify paper and packaging materials and formats that are 

most significant in the U.S. municipal solid waste stream by 

weight and environmental relevance

• Identify material and format trends in U.S. municipal solid 

waste that may not be significant in terms of weight or 

environmental relevance today, but are growing in importance 

and are underserved by existing collection and recovery for 

recycling infrastructure. 

Publish this information as an authoritative report for broad use to 

improve the materials selection and design of packaging and fitness 

for recovery through existing recycling infrastructure.

Expected Results 

&

Performance 

Metrics

• Complete list of design guidelines that provide science based 

and / or data driven recommendations, reviewed by credible 

authorities as needed

• Include gaps in data and proposed plan to mitigate gaps
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• Identification of best in class materials

• Identification of emerging materials

• Propose feedback process (recyclers / designers)

Project 

Organization

Technical resources on this subject are readily available, however, 

not organized to facilitate collaboration. A project team will be 

created that comprises key stakeholders and thought leaders from 

the existing packaging value chain and packaging recovery system. 

The work product for this team will have a significant impact on the 

financial performance of the packaging industry. Participation in 

this work team will be voluntary from those key stakeholders who 

will face this greatest financial impact resulting from this body of 

work. It will be in the interest of these organizations to donate time 

and services to this effort. 

Project facilitation may also be donated. Should this not be the 

situation, a project facilitator would be necessary. 

Notes How can packaging design encourage consumer recycling? 

How can packaging design facilitate collection of packaging 

materials? 

How can packaging design support the most common sorting 

technologies? 

How can packaging design facilitate end markets/uses for 

packaging materials? Ongoing support for a feedback loop process 

also needs to be defined.

What will be the mechanism for defining actionable projects based 

on recommendations from this effort? 

2. Recycling Incentives

Objectives 1. Identify recycling incentive programs/strategies for curbside and 

drop-off programs that have been proven to increase consumer 

participation and maintain material quality.

2. Identify relevant enablers and barriers to successful 

implementation of effective programs.

3. Recommend strategies for facilitating broader implementation of 

effective incentive programs.

Project Summary This project would identify recycling incentive programs/strategies 

for curbside and drop-off programs that have been proven to 

significantly increase consumer participation in recycling programs. 

Primary focus would be research by a credible third party that 

would:

1. Review existing literature and survey existing program 

operators to determine the most successful efforts to date in the 

United States. To the extent it would be feasible and relevant 

for U.S. applications, also gather similar information for 
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programs in other countries.

2. Consider a broad range of incentives including policy (e.g. 

PAYT), voluntary reward systems (e.g. RecycleBank), and 

relevant design elements of collection systems.

3. Seek studies and information sources that have impact and cost 

data to help enable objective comparisons

4. Describe relevant program design attributes (e.g. participants, 

governance, financing models, etc.)

5. Identify relevant enablers and barriers to successful 

implementation at both local and regional levels

6. As necessary and appropriate to identify barriers/enablers of 

success, conduct primary research with consumers, program 

operators, local/state waste management officials, other system 

participants.

The intent would be to place an initial focus on curbside and drop 

off recycling and to address “away-from-home” and 

commercial/institutional/industrial scenarios in a subsequent phase 

as allowed by funding.

Expected Results A published report that will:

1. Drive a data-based, public understanding of the most effective 

recycling incentive programs

2. Identify relevant enablers and barriers to successful 

implementation at both local and regional level.

3. Recommend potential strategies for facilitating broader 

implementation of successful programs.

Performance

Measures

Metrics

The study design will identify a set of measures to compare impacts 

of different approaches. Areas to address will include:

1. Participation rates

2. Impacts on material diversion and material quality

3. Sustained performance over time

4. Program costs

5. Other relevant economic and performance indicators

Assessment Areas 1. Review of existing public literature.

2. Outreach to successful program operators.

3. Outreach to trade associations, non-profits, and other 

organizations participating in/active in consumer incentive 

programs.

4. Outreach to targeted local, state, federal government officials.

Project 

Organization

1. Sponsoring organization(s) to fund research.

2. Financial resources for conducting research.

3. Steering committee/advisory panel to review study design and 

to manage RFP and selection process, to identify and provide 

input on potential sources of information, and to oversee the full 

development of the project.

4. Credible 3rd party to conduct research & publish report.

Additional While not a stated objective of the project, the group believes the 
105

Comments outputs from this study could help inform future dialogue on “what 

must be true” to scale implementation of successful approaches. 

While public data exists on individual programs, we believe a 

comprehensive, quantitative, comparative study that highlights 

success drivers and barriers would provide unique value, help to 

inform efforts by multiple stakeholders, and ultimately serve to 

enable broader implementation of successful strategies. 

Since the nature of the report’s findings will dictate the types of 

stakeholders who might be interested in trying to scale 

implementation of successful approaches, we decided not to include 

how action on the report’s findings could be facilitated within the 

scope of this project. However, the report and its findings will be 

public and it is likely the aforementioned sponsors and steering 

committee would have an interest in evaluating if/how the study 

results could be acted upon.

Notes How can recycling incentives/education increase participation in 

waste diversion programs? 

How can recycling incentives/education encourage demand for 

products whose packaging has an end of life alternative to landfill 

disposal? 

How can recycling incentives/education facilitate preparation of 

packaging materials compatible with available collection and 

sorting opportunities? 

How can recycling incentives/education encourage feedback to 

brand owners regarding packaging issues?

3. Consumer Education Program

Objectives Develop a model multi-stakeholder public education program that 

is effective in increasing recycling participation. Pair well 

developed brand owner marketing capacity and reputation with 

NGO/governmental community based social marketing (CBSM) 

concepts to increase sustained consumer commitment to recycling.

Project Summary • Gather existing research (e.g. NRC study from 2007 and others) 

/ conduct new research on current consumer perception and 

motivators for various demographic segments with respect to 

recycling and consumer brands.

• Characterize brand appeal associated with recycling. Identify 

messages that promote behavior change.

• Based on research, develop a multi-stakeholder consumer 

education program that integrates brand attributes with 

identified recycling motivators.

• Pilot the consumer education program in test markets to 

quantify changes in consumer recycling perceptions, behavior, 

and recovery rates. 
106

• Focus on developing a “national norm” for recycling behavior 

while recognizing that specific “how to” education cannot be 

developed until and unless infrastructure and jurisdictional 

policy harmonization occurs. 

• Address how to also educate to encourage demand for recycled 

content in packaging (participation in “closing the loop”).

• Determine levels of financial support needed and potential 

options for sustaining the necessary levels of support to achieve 

effective consumer education.

Expected Project 

Results

The Consumer Education Program will:

• Drive a research based understanding of how consumer 

education will yield higher participation in waste diversion 

programs.

• Identify specific messaging to encourage consumer behavior 

and choice toward sustainable end of life materials management 

practices and products. 

• Determine the amount and sources of funding needed to sustain 

high levels of consumer participation.

Performance 

Measures 

Metrics

• Conduct market research to identify current attitudes, focus 

demographics, and messages that motivate behavior change.

• Gather existing or conduct primary research of consumer 

attitude and brand appeal associated with recycling.

• Recovery rates – utilize existing published recycling rate 

sources from pilot markets where municipalities accurately 

capture this data already.

• Utilize existing data sources on household recycling 

participation rate, via selection of pilot market that already 

captures the info.

• Quantify consumer recycling “prompts” and messages before, 

during, and after a pilot campaign. Correlate frequency to 

behavior. 

Assessment Areas

 Primary

 

Secondary

• Gather/conduct research to identify consumer perceptions, 

motivators and recycling behavior attributes.

• Identify brand links to consumer behavior regarding disposition 

of materials at end of life.

• Correlate frequency of recycling messages and prompts to 

consumer behavior.

• Test hypothesis that consumer’s respond to perceived social 

value in purchasing by developing messages linking sourcing, 

labeling, packaging perceptions, and brand identity. Determine 

whether brand image and connection with recycling can drive 

improvement in recycling rates.

• Evaluate the level of necessary spending or cause marketing 

investment to achieve results and suggest financing mechanisms 

to achieve that level of spending.
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Project 

Organization

Led by a small manageable group of stakeholders that would 

include representatives from a trade association, a brand owner 

company, a retailer partner state and local government and a nongovernmental association.

Future additional potential stakeholders if the project expands 

beyond pilot could include: Cross-Branding Opportunities with 

Non-CPG Brand Owners interested in similar value benefit to their 

image/reputation: durable goods, auto, and apparel.

Notes & 

Miscellaneous

• Existing landscape: CPG brand research and information 

partially exists but at proprietary levels. 

• Commitment to consumer education program may likely be 

brand specific, as opposed to corporate.

• 2008 Study by Cone/Duke University demonstrated 28% to 

78% increase in actual purchases within toothpaste and 

shampoo categories for well-designed cause marketing 

campaigns.

Risk with no action:

• Underutilization of existing recycling infrastructure, continued 

stagnant recycling rates.

Miscellaneous:

• Two thirds of brands now engage in cause marketing, 97% of 

marketing executives believe cause marketing to be a valid 

business strategy.

• CBSM understanding that Community Based Social Marketing 

is not Social Media. Social media may be a tool in a part of a 

CBSM campaign.

http://www.epa.gov/osw/rcc/web-academy/2010/may10.htm

http://www.epa.gov/osw/rcc/web-academy/2010/pdfs/schultz5-

10.pdf

http://www.epa.gov/osw/rcc/web-academy/2010/pdfs/dennings5-

10.pdf

• Explore potential opportunities for consumer education 

campaign awards

• Explore opportunities to disseminate this knowledge through 

presentations, papers, and webinars.

• Explore potential to include industry sectors beyond CPGs, 

including: auto, tech, medical device, media, retailers, sports 

apparel.

4. Material Collection

Objectives Research, validate and document current state of affairs of the 

existing collection infrastructure for packaging and printed 

materials in the U.S. and identify ways to optimize material 

collection.
108

Project Summary • The project would utilize existing reports from reliable 

resources and conduct additional investigation as needed to 

establish the highest level of knowledge of the current state of 

the collection infrastructure in the U.S. 

• The project would seek to provide a comprehensive analysis of 

the strengths and weaknesses of the existing collection system, 

including the efficiency and effectiveness of current collection 

mechanisms, the extent to which all generation points are 

served by collection, and the gaps in service in terms of both 

generation points and the range of materials collected from 

those points (reach and rates). 

• The project would further identify and recommend methods to 

address the access, efficiency, and effectiveness issues and seek 

to characterize the level and kinds of investments necessary to 

address those issues. 

• The project would define “gold standard/best in class” for 

existing systems along with strategies to bring others up to that 

standard

• The project would also define opportunities to “raise the bar” 

on current best in class along with strategies to execute those 

opportunities.

• Finally, the project would recommend potential sources of 

financing for optimizing material collection.

The project would be conducted in coordination with the proposed 

project for material sorting, recognizing the linkage between the 

two and aimed at finding ways to integrate project results.

Expected Results The Material Collection Optimization Project will result in:

• A comprehensive understanding of the opportunities for 

performance improvement in the U.S. recycled material 

collection system.

• A specific listing of opportunities and interventions to improve 

material collection.

• An identification of potential financing strategies to address 

material collection performance.

• Possible tangible examples of financed interventions that have 

achieved actual performance improvements and demonstrate 

the potential of additional interventions.

Performance 

Measures

Metrics

• Level of access to various kinds of collection services by 

single-family residences.

• Level of access to various kinds of collection services by multifamily residences.

• Level of access to various kinds of collection services by 

citizens in away-from-home locations.
109

• Level of access to various kinds of collection services for work 

places.

• Cost per ton of various collection services, including initial 

investments and ongoing operational costs.

• Participation levels in various kinds of collection services by 

type of access.

• Extent of inclusion or exclusion of specific materials in 

collection programs.

Assessment Areas • Data related to curbside vs. drop off vs. other collection 

processes

• Data related to residential, away-from-home and workplace 

collection.

• Information on who provides different kinds of collection 

services 

• Cost data on collection services - Efficiency data (e.g., $/ton 

collected)

• Gaps in access, effectiveness, and efficiency

• Data related to collection equipment (e.g., 

Trucks/capitalization).

• Mandated vs. voluntary programs.

• Data showing reach of existing MRFs as material outlets for 

collection programs

• Detailed descriptions of MRF capabilities to receive more 

collected materials.

• Data related to what materials MRFs accept (single stream or 

other as well what materials – glass, corrugate, plastics, etc.) 

along with appropriate mapping to show visually (overlap with 

sorting work stream). MRF Collection capacity data (e.g.,

ton/day) and percentage utilization.

• Ownership/Funding data of collection systems (public, private, 

hybrid)

• Number & average wages of employees (jobs 

maintenance/creation)

• Level of integration with other waste management options 

(e.g., landfills, composts, waste-to-energy plants).

• High level cost assessment of bringing existing MRFs to 

standards of top performance 

• High level estimates of reach, recovery and recycling 

performance improvements attainable if those investments are 

made.

Project 

Organization • Key stakeholders: Current EPA stakeholders; representative 

collection system operators, representative material processors 

and end-users, representative packaging and commodity groups.

• Funding and project ownership must be determined.
110

• Will need development of a scope of work for the assessment 

and a plan for the follow-up.

• Linkage needed with sorting project.

• Availability of resources to address collection issues identified 

in assessment.

Identify 2-3 people from this group to serve as a “steering 

committee” to oversee the principal researcher(s).

Presentation of findings/distribution of final report to broader group

Notes How can a collection system facilitate convenient consumer 

participation? 

How can a collection system deliver materials to a sorting facility 

in a manner that reduces waste and increases the likelihood of 

recovery? 

How can a collection system provide feedback loops to nonparticipating or negatively participating consumers? 

How can collection systems facilitate higher value for materials for 

aftermarket use?

5. Material Sorting

Objectives Identify and map out steps to improve the effectiveness of material 

sorting to help optimize the recycling system.

Project Summary This project will assess sorting operational practices, technology, 

and other factors (not limited to US) to help pinpoint interventions 

that could increase throughput, improve material yield, quality and 

value, accommodate the addition of new materials in the collection 

system, and reduce average cost per ton. The project would further 

seek to characterize investment levels and targets to optimize 

material sortation in the short and long run. Finally the project 

would make recommendations how sorting improvements can be 

financed.

Expected Project 

Results

The Material Sorting Optimization Project will result in:

• A comprehensive understanding of the opportunities for 

performance improvement in the U.S. recycled material 

sortation system.

• A specific listing of intervention strategies to improve material 

sortation.

• An identification of financing strategies to address material 

sortation performance.

• Examples of financed interventions that achieve actual 

performance improvements and demonstrate the potential of 

additional interventions.
111

Performance

Measures

Metrics

• Material yield

• Material quality

• Quantity of throughput

• Cost per ton of material processing

• Availability and status of sorting infrastructure

• Use of best management practices

• Use of available and best technologies 

• The level of flexibility and adaptability of existing systems

Assessment Areas • Inventory of sorting infrastructure, including gap analysis.

• Inventory of available and best technologies, including gap 

analysis.

• General state of material throughput, yield, and quality.

• Material streams – current and potential, along with 

identification of materials that cannot or should not be handled 

by MRFs)

• Cost of processing per ton.

• Cost of technologies.

• Costs of addressing infrastructure, technology, and best practice 

gaps.

• Identification and planning for organizational and financing 

mechanisms to address sorting optimization (include R&D).

• Outreach to recycling technology community.

• Socio-economic implications of upgrading infrastructure – e.g., 

job creation, MRF working conditions, etc.

• How rapidly is the infrastructure and technology changing?

• Sortation post-MRF – presence of and development of 

supporting, downstream infrastructure.

Project 

Organization • Key stakeholders: Current EPA stakeholders; representational 

MRF operators, representational material end-users (e.g., Paper 

mill, carpet manufacturer, etc.)

• Funding and project ownership needed for execution.

• Need for a plan for the assessment and a plan for the follow-up.

• Linkage needed with other projects (e.g., problem and 

opportunity materials). 

• Availability of resources to address sorting issues identified in 

assessment.

Notes How can the sorting system facilitate maximum recovery of reuseable materials? 

How can sorting systems provide feedback loops to consumers 

regarding preparation and sorting of collected materials? 

How can a sorting system provide a feedback loop to collection 

systems for delivery of contaminated materials? 
112

How can sorting systems maximize value of sorted materials for 

end of life?

How does this link to package design and choices of materials in 

packaging? 

How does this project help facilitate data based feedback loops to 

producers on packaging materials or formats that are problematic?

What will be the mechanism for defining actionable projects based 

on recommendations from this effort?

6. Aftermarkets – Exchange Resource for Recovered Packaging Materials

Objectives • Produce a better system to link recovered materials back to 

uses in packaging and other products. 

• Build markets for recovered materials.

• Provide a venue for End Users (CPGs and their supply chain 

partners – converters and raw material suppliers) to source 

recovered materials that meet their material requirements.

• Provide a venue for recyclers to better market their materials.

• Provide a venue for End Users to post information on materials 

they are seeking (transparency on demand).

Project Summary • Provide an online database of recovered and/or processed 

materials for recycling into packaging or other uses to address a 

stated need for consistent, reliable sources of recovered 

materials. 

o Improve access to materials, facilitating increased 

recycled content in packaging which, in turn, should 

drive market demand and incremental value for 

recovered materials.

o Create markets for recovered materials, which may 

provide for more diversity of materials recovered for 

new uses.

o Increase market visibility for packaging-suitable 

materials that are being included in an increasing 

number of municipal recycling programs (e.g., 

polypropylene) which should allow for faster 

collaborations between raw material supplier and end 

users.

o Drive better quality and economics in the recycling 

system by providing more transparent supply/demand 

information.

• If successful, the project has potential to be expanded at a later 

date to include additional industry sectors for market 

development (e.g., plastics recycled to automotive and textiles 

sectors, etc.) which should further improve the financial picture 

for recovery/recycling.
113

Performance

Measures

Metrics

• Interactive, web-based database that is managed ongoing, not a 

report that is published one time.

o Number of users (seekers and sellers), by sector

o Number of materials

o Amount of material offered

o Amount of material sourced

o Quality of materials offered

o Value of materials offered/purchased (if we can get it)

• Recommendations for process/resources to manage and 

administer the database ongoing (subscription service to justify 

costs, profit sharing? How to pay for the efforts ongoing so that 

the system is economically self-sustaining?)

Assessment Areas

/ Work Plan

1. Assessment of current resources and identification of need gaps 

(include assessment of WRAP in UK and other existing 

resources).

2. Identification and recruitment of initial partners.

3. Needs identification

o End users must identify what information they need to 

be able to use the database for sourcing material (e.g., 

source locations, volume, physical properties, chemical 

properties, etc.).

o Pressure test specification tolerances to develop the 

most robust system (e.g., tighter specs with supply vis a 

vis broader specs with demand – what is the right 

balance for the most efficient system?)

4. Database design and development.

o Explore opportunity to augment existing resources vs. 

designing something new from scratch.

o Develop recommendation of cost/benefit of developing 

new vs. improving and expanding something already 

established.

o Develop recommendation for someone to host and 

manage the database ongoing.

5. Recommend process to manage and administer system ongoing.

Project 

Organization

• Led by cross-sectional subset of current EPA dialogue group

• See potential engagement from other resources:

o Academics (e.g., MSU’s CPIS)

o Trade associations (AF&PA, APR, earth911, etc)

o Government (EPA, Calrecycle, etc)

Notes Discussion Points:

• Is this project just about plastics or to include other materials?

• Do End Users have to be limited to packaging? Can end uses 

target other industries?

• What other functionality may be needed?
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7. After-Markets – Benchmarking Recycling Rate by Material

Objectives Develop consistent, transparent, and broadly-supported data on 

material recycling rates for specific commodities would provide 

critical information for improving recycling system performance. 

Build a database that could be used to determine the recycling rate 

for the major paper and packaging materials by major converted 

form. Use this database to benchmark and measure incremental 

performance of recycling rate for materials by major converted 

form over time.

Project Summary This project will involve a national survey of available paper and 

packaging data to identify potential sources of data, assess their 

quality, and then calculate the relevant recycling rate for materials 

by major converted form.

Project Scope: 

• Data collection should address at least 80% of all paper and 

packaging materials in major converted forms, by weight, in 

U.S. municipal solid waste (including materials currently 

considered recyclable and those that are not). 

• The project will use trade association production / export / 

import data in combination with MSW generation data and/or 

U.S. Department of Commerce data. Other data sources may 

also be relevant. 

• Part of the project will be to identify gaps where data is 

missing or data collection infrastructure is not in place. 

• The project could also address drivers, issues, and a potential 

platform for uniform and comprehensive local program 

reporting.

Performance 

Measures

Metrics

• Generation of paper and packaging materials by major 

converted form.

• Collection of paper and packaging materials by major converted 

form.

• Data on the amount and types of baled paper and packaging 

materials (e.g., material and bale spec.

• Export data of material by major converted form, at national 

level.

• Recycling rate: amount of material sorted, baled and/or sold 

into a market (i.e. actually recycled or reused) relative to the 

total amount of that material generated in MSW.

• To the extent feasible, measurement of the quality of materials 

(e.g., typical contamination issues and rates, yield loss, etc.)

• National benchmark of data completeness with regard to 

materials by major converted form.

• National benchmark of data for material collected by major 

converted form.
115

• National benchmark of data for collected material baled and/or 

sold (recycling rate by material and converted form).

Assessment Areas • Landscape: The EPA MSW characterization report is one of the 

only publicly available, national resources of paper and 

packaging materials in the municipal solid waste stream. 

However, it only provides limited information on converted 

forms of packaging.

• Opportunities presented: This project would allow a variety of 

stakeholders, including businesses to assess collection and 

recycling performance across the U.S.

• This project would allow a variety of stakeholders to identify 

what materials are collected in high amounts and where.

• Technical difficulties: Collecting the data could be challenging, 

but we are aware of a lot of existing through distributed sources 

of information. Data on converted forms will be most difficult. 

• Risk of no action: No reasonable basis of information to inform 

policymakers. Recycling continues to stagnate nationally and 

high demand for recycled materials continues to not be met.

Project 

Organization

• This is a research project to identify and summarize existing 

data sources, identify gaps and develop a strategy for keeping 

information updated. It should involve a core set of key 

Stakeholders and data sources. It would require a project 

manager with topical expertise and an outstanding network in 

this area. Access to key stakeholders to facilitate data collection 

would be critical- e.g., trade groups, MRFs, and local 

governments. Examples include: 

o The Sustainable Packaging Coalition which has 

compiled collection data by materials and converted 

forms for most packaging.

o Paper trade associations such as AF&PA and the 

Magazine Publishers of America and likely key 

stakeholders for paper.

o Department of Commerce and major materials trade 

associations that are the source of most generation data 

by material by converted form.

o RW Beck (SAIC) and/or other consulting firms with a 

significant amount of expertise in this area and with 

experience in taking data to the state level.

o MRF operators with data on what is sorted out of 

collected material, by material and converted form, and 

what bales are produced.

o Recyclers who stand to profit or lose from the 

opportunities identified by these data.

• Will need to develop a communication plan to understand how 

to make the product of this effort publicly available and ensure 

it remains relevant.
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Notes There is a lot of overlap between this project idea and the materials 

sorting project.

• A potential outcome of project could be to develop a model 

(ideally web-based) for reporting at all levels – from local to 

regional, etc – to enable a reasonable roll-up of all available 

information. 

• Could support regional economic development initiatives and 

end markets and allow understanding of state by state recycling 

markets.

• Information would support focused market development.

• Information would support targeted infrastructure investment.

• Information would improve accuracy of recyclability claims.

• Information would facilitate investment for consumer 

education.

8. System Decision-Making

Objectives Characterization of decision-making in the U.S. recycling system 

and identification of methods to improve this aspect of the system.

Project Summary The project will seek to analyze the current decision-making 

framework and process in the U.S. recycling system and identify 

opportunities and barriers that affect optimization of the system. 

The project will also identify potential action steps to address these 

opportunities and barriers.

The project will produce a model of decision-making within the 

current system, including:

• Who makes decisions, e.g.: local governments, state 

governments, generators, haulers, material processors, endusers, retailers, and CPG companies.

• What kinds of decisions they make (with examples), e.g.,:

o Budgetary 

o Programmatic

o Policy

o Investments

• What factors affect decision-making

o Level of knowledge and information

o Perceptions of roles in the system

o Motivations, risks, and rewards from decisions that 

optimize (or fail to optimize) the system

• Consequences of the current decision-making framework and 

process.

The project would identify initiatives and activities that would 
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improve the decision-making process in regard to optimizing the 

recycling system, including for example:

• Broadly applicable policy options 

• Outreach and education strategies

• Possible structural changes in the governance framework and 

decision-making process

• Identification of opportunities to provide feedback loops among 

the various stakeholders in the value chain.

The kind of methodologies the project could utilize would include:

• Researched analysis of the current decision-making framework 

and process

• Surveys of decision-makers

• Focus groups

• Interaction to receive input from associations representing 

decision-makers

To the extent possible, the project would also evaluate and 

characterize decision-making in recycling systems in other 

countries.

Expected Results 

&

Performance 

Metrics

The project will result in:

• A comprehensive model of the decision-making framework of 

the current recycling system.

• An evaluation of the opportunities and barriers to optimizing 

recycling in the current decision-making system.

• An identification of initiatives and action steps that would 

improve the results of the decision-making process on the 

recycling system.

• Possible execution of specific projects to improve the 

functioning and effects of the decision-making process.

Project 

Organization • Multi-stakeholder ownership and oversight of project and 

results. 

• A working group of system stakeholders to produce a detailed 

scope of work for the project and to oversee the execution of the 

project.

• Engagement of contracted parties to conduct the project.

• Funding for execution of the project.
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V. Final Observations

This report constitutes the work product of several key stakeholders invited by EPA into 

a collaborative dialogue with one another to examine financing challenges faced by the 

current system for recycling of packaging and printed material at the municipal level. 

Future multilateral efforts can opt to build on the assessments of key strategies for 

optimizing and sustainably funding the system for recycling, and perhaps identify the 

most promising strategies for implementation. Similarly, the array of proposed projects 

to reduce the burden on the current recycling system may be tested, refined and 

implemented via cooperation among private, public and civic sector leaders.

The dialogue was not intended to solve every relevant challenge and was constrained by 

time, resources, and oftentimes contrasting visions regarding scope and outcome. 

However, participants noted that the dialogue set a precedent for cross-sector 

collaboration, representing the first time such a diverse and influential array of 

stakeholders had assembled for focused, sustained deliberation regarding sustainable 

financing of recycling of packaging at the municipal level. It is hoped that the dialogue 

succeeded in opening new and enduring channels of communication, broaching difficult 

but important questions, establishing a foundation for future cross-sector efforts that can 

be more results-oriented, and providing the means for setting a course toward a 

sustainable and effective system.
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Appendix A: Sample letter from state government 

to EPA requesting the dialogue


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Appendix B: Dialogue Participants

The following individuals participated, at the invitation of EPA, in the Dialogue on 

Sustainable Financing of Recycling of Packaging at the Municipal Level. Inclusion in 

this participant list does not imply endorsement of the contents of this report. The listed 

EPA officials participated mainly as observers, providing occasional technical assistance 

upon request.

Lee Anderson

Director, State and Local Government 

Relations

General Mills

Janine Bogar

Beyond Waste Coordinator 

Washington State Dept of Ecology 

Alternate: Shannon McClelland

Environmental Planner

Washington State Department of 

Ecology

Chip Brewer

Director-Worldwide Government Relations

S. C. Johnson & Son, Inc.

Scott Cassel

Executive Director

Product Stewardship Institute

Alternate: Sierra Fletcher

Director of Policy and Programs

Product Stewardship Institute

Dan Colegrove

Senior Director, State and Local 

Government Affairs

Kraft Foods

April Crow 

Global Sustainable Packaging Manager

Coca-Cola

Steve Danahy

Supervisor, Waste Planning & Aid Unit

Nebraska Department of Environmental 

Quality 

John A. Delfausse 

Vice President

Global Package Development

Chief Environmental Officer

Estee Lauder Corporate Packaging

Resa Dimino47

Special Assistant

Commissioner’s Policy Office

New York State Department of 

Environmental Conservation 

Miriam Gordon

California Director

Clean Water Action / Clean Water Fund

Garth Hickle

Product Stewardship Team Leader

Minnesota Pollution Control Agency

Jen Holliday

Environmental & Safety Compliance 

Manager

Chittenden Solid Waste District

Sego Jackson

Principal Planner

Snohomish County, WA

Anne Johnson

Director 

Sustainable Packaging Coalition 

Tom Langan

 47 Following the third in-person meeting, 

participated through the close of the dialogue as 

the representative of We Recycle!
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Director

Government Relations & Public Affairs -

U.S.

Unilever

Justin Lehrer

Program Manager

StopWaste.Org

Alameda County Waste Management 

Authority

Alternate: Debra Kaufman

Senior Program Manager

StopWaste.Org

Alameda County Waste Management 

Authority

Kim Lymn

Senior Manager, Packaging

Target Corporation

Robert "Bob" Mann

Founder, Bridging the Gap, Inc.

Co-Director, Shadowcliff Lodge

Jack McAneny 

Associate Director, Global Sustainability 

Procter & Gamble

Scott Mouw 

Director

North Carolina State Recycling

Joan Pierce

VP, Global Packaging

Global Supply Chain

Colgate-Palmolive

Tom Rhoads

Executive Director

OCRRA

Alternate: Andrew Radin

Director of Waste Reduction and 

Recycling 

OCRRA

Bill Sheehan

Executive Director 

Product Policy Institute

Kate Sinding

Senior Attorney 

Natural Resources Defense Council

Bill Smith

Senior Environmental Specialist

City of Tacoma Solid Waste Management

Theresa Stiner

Environmental Specialist Senior

Iowa Department of Natural Resources

Land Quality Bureau

Gail Tavill 

Vice President, Sustainable Development 

Research, Quality & Innovation

ConAgra Foods

Brad Wolbert 

Hydrogeologist

Wisconsin Department of Natural Resources

Russ Wood 

Senior Director of Responsible and 

Sustainable Sourcing

PepsiCo48

Amy Zettlemoyer-Lazar49

Packaging Director

Walmart and Sam’s Club

USEPA (observers, in convening role)

Sara Willis Hartwell

US EPA

Senior Policy Advisor

Office of Resource Conservation and 

Recovery

 48 PepsiCo was initially represented by Beth 

Sauerhaft, Senior Manager, Environmental 

Stewardship, Pepsi Beverages America.

49 Represented at the first meeting by Miranda 

Ballentine, Director of Sustainability, Walmart 

Stores, Inc.
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Jay Bassett

Chief, Materials Management 

USEPA Region 4 

Kent Foerster

US Environmental Protection Agency

Office of Resource Conservation and 

Recovery 

Chris Newman

Materials Management Branch

U.S. EPA Region 5

Facilitators

Jody Erikson

Senior Associate

The Keystone Center

Suzan Klein

Associate

The Keystone Center

John Lingelbach50

Principal

Decisions & Agreements

Brad Sperber

Senior Associate

The Keystone Center

 50 Participated from the commencement of the 

dialogue through the first in-person meeting.
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Appendix C: Glossary of Terms

Away-from-home Recycling – Recycling in public places such as parks, stadiums, 

convention centers, airports and other transportation hubs, shopping centers, and at 

special events.

Consumer Packaging – The system of packaging materials that holds a product or group 

of products, including primary (bottle, can, jar, carton, etc.), secondary (encloses the 

primary packaging, such as a box around a tube or bottle) and tertiary (transportation) 

packaging. Consumer packaging 1) protects the product from physical damage, 2) 

provides chemical barriers (light, moisture, O2, CO2, etc), 3) provides information to 

consumers (some required by law) and 4) provides “theater” (buy me!).

Curbside Collection – Collection strategy for recyclables, managed by local government 

or through private contract, where recyclables are collected from a home or business 

location, such as the end of driveway or “curbside” on a pre-determined schedule.

Disposal Ban – A disposal ban prohibits designated types of waste from disposal at 

landfills and incinerators.

Diversion – Waste diversion is the prevention and reduction of generated waste through 

source reduction, recycling, reuse, or composting. Waste diversion generates a host of 

environmental, financial, and social benefits, including conserving energy, reducing 

disposal costs, and reducing the burden on landfills and other waste disposal methods

Drop-off Collection – Centralized collection strategy for recyclables, including 

packaging and electronics, where consumers deliver the material to the collection site. 

Drop off collection sites may be staffed or unstaffed, and may be open round the clock, or 

available on a pre-determined schedule.

End-of-life Management – Management of materials and products at the end of their 

useful life, includes recycling, composting, combustion with energy recovery, other 

waste-to-energy strategies like anaerobic digestion, and burial in a landfill.

Extended producer responsibility (EPR) – A policy approach in which the producer’s 

responsibility for its product extends to the post-consumer management of that product 

and its packaging. The approach assumes that the producers of products should bear a 

significant degree of responsibility (physical and/or financial) not only for the 

environmental impacts of their products downstream from the treatment and/or disposal 

of the product, but also for their upstream activities inherent in the selection of materials 

and in the design of products.
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OECD defines EPR as an environmental policy approach in which a producer’s 

responsibility for a product is extended to the post-consumer stage of a product’s 

life cycle. An EPR policy is characterized by: (1) the shifting of responsibility 

(physically and/or economically; fully or partially) upstream toward the producer 

and away from municipalities; and (2) the provision of incentives to producers to 

take into account environmental considerations when designing their products. 

While other policy instruments tend to target a single point in the chain, EPR 

seeks to integrate signals related to the environmental characteristics of products 

and production processes throughout the product chain.

Full Cost Accounting – An approach to identifying and assessing the cost of managing 

solid waste operations, and assisting with short and long-term program planning to help 

identify measures for streamlining and improving operations. Unlike other common 

methods of accounting that record only current outlays of cash, FCA takes into account 

all of the monetary cost of resources used or committed to MSW programs, which may 

differ from cash outlays. FCA recognizes economic, environmental, health, and social 

costs of an action or decision. It traces direct costs and allocates indirect costs.

MRF (materials recovery facility or materials reclamation facility or materials 

recycling facility) – A specialized plant that receives, separates and prepares recyclable 

materials for marketing to end-user manufacturers.

Municipal Solid Waste (MSW) – Includes durable goods, non-durable goods, containers 

and packaging, food wastes and yard trimmings, and miscellaneous inorganic wastes 

generated by households and commercial establishments, and usually collected by local 

government bodies . MSW does not include industrial, hazardous, or construction waste.

Pay-As-You-Throw (PAYT) – A unit pricing or variable-rate pricing waste management 

strategy, where residents are charged for the collection of municipal solid waste based on 

the amount they discard, creating a direct economic incentive to recycle more and to 

generate less waste. Traditionally, residents pay for waste collection through property 

taxes or a fixed fee, regardless of how much—or how little—trash they generate. Pay-AsYou-throw (PAYT) breaks with tradition by treating trash services similar to electricity, 

gas, and other utilities. Households pay a variable rate depending on the amount of 

service they use. 

Post-Consumer – A material or finished product that has served its intended use and has 

been diverted or recovered from waste destined for disposal, having completed its life as 

a consumer item. Post-consumer materials are part of the broader category of recovered 

materials.
125

Pre-Consumer – Refers to materials generated in manufacturing and converting 

processes, such as manufacturing scrap and trimmings/cuttings. Also includes print 

overruns, over issue publications (newspapers and magazines), and obsolete inventories.

Processing facilities – Intermediate operations that handle recyclable materials from 

collectors and generators for the purpose of preparing materials for recycling (material 

recovery facilities, scrap metal yards, paper dealers, and glass beneficiation plants). 

Processors act as intermediaries between collectors and end users of recovered materials.

Product Stewardship – A policy approach where all parties involved in the life cycle of 

a product share responsibility for the impacts to human health and the natural 

environment resulting from the production, use, and end-of-life management of the 

product. 

Source Reduction – Refers to reducing waste by not producing it at all. Source 

reduction can be achieved by changes in the design, manufacture, purchase, or use of 

materials or products (including packaging) to reduce their amount or toxicity before they 

become municipal solid waste.

Sustainable Financing – A method of financing that provides secure, sufficient, stable 

and ongoing financial resources. Note: “sufficient” includes concepts such as “timely,” 

“full costs,” and “meets goals,” and “stable” includes the notion that funds are used for 

their intended purpose and are not susceptible to being diverted or raided.

Sustainable Packaging (definition from the Sustainable Packaging Coalition, 

www.sustainablepackaging.org) –

• Is beneficial, safe & healthy for individuals and communities throughout its life 

cycle;

• Meets market criteria for both performance and cost;

• Is sourced, manufactured, transported, and recycled using renewable energy;

• Optimizes the use of renewable or recycled source materials;

• Is manufactured using clean production technologies and best practices;

• Is made from materials healthy in all probable end of life scenarios;

• Is physically designed to optimize materials and energy;

• Is effectively recovered and utilized in biological and/or industrial closed loop 

cycles. 

No ranking is implied in the order of definition criteria.