Economic Aspects Of Extended Producer Responsibility by Organisation for Economic Co-Operation and Development

By Organisation for Economic Co-Operation and Development

Ebook via business enterprise for financial Co-Operation and improvement

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Discussion in the NEPSI process, which is focusing on developing a voluntary electronics recycling system, have included disagreements over exactly which products should be targeted in the system. Some consensus seems to exist over CPUs, computer monitors, and some peripherals, but exactly which peripherals to include and whether other electronics products should be in the agreement are points of debate. There are also discussions, with no resolution as yet, on whether and to what extent the group will try to address DfE.

We present two economic incentive-based policy instruments here that may have the potential to spur DfE: tradable recycling credits and a DfE reward system. We then return to the issue of the cost of policy implementation. 1 Tradable recycling credits The studies by economists that I reference here do not look beyond tax and subsidy-based policy instruments. 11 Tradable recycling credits are similar in spirit to tradable emissions permits (Tietenberg, 1985). 12 A tradable recycling credit programme for electronics, for example, might work as follows.

One, the so-called first best option, is welfare maximizing. The instrument that may be used, a Pigovian tax for instance, corrects the misleading signal of the market in order to equalize the marginal abatement cost and the marginal external cost. The other objective, so-called second best à la Baumol, is more modest. It consists in cost minimizing. In such a case, the environmental policy instrument is chosen to achieve a given environmental target at least cost. g. emission standards). Besides their cost-effectiveness, instruments may also 51 differ in terms of dynamic efficiency, public acceptance, environmental effectiveness, distributional effects, administrative costs, and so on.

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