1. ADFs AND PRODUCT STEWARDSHIP: Are there Practical Options for “Hard to Manage” Products at the Local Level? 2011 Texas Recycling & Sustainability Summit Lisa A. Skumatz, Ph.D., Principal Skumatz Economic Research Associates, Inc. (SERA) Superior, CO 80027 www.serainc.com © SERA 2011, All Rights reserved May be used with permission of author

2. SERA WHY CONSIDER PRODUCT STEWARDSHIP OPTIONS…?  Some products are troublesome: Difficult or costly to dispose (appliances, tires) Common, quickly used & disposed (newspaper, disposable diaper, bottles, litter, bags) Hazardous High environmental or health effects  Goals may relate to these issues and beyond… Move costs to proper agent Provide incentives for changes in behavior by consumer and/or producer Diversify revenues / funding issues / enterprise funds

3. SERA VARIATIONS IN OUR CLIENT / COMMUNITY SITUATIONS  Client considerations Next steps, SWM not free / revenues diversification and appropriateness, direction of costs; incentives Reduction goals, progress / next steps; funding; incentives  Solid waste management not free – Current revenues cover much, but: Don’t cover indirect costs of SWM (health, environmental) Don’t provide sustainable source covering even direct costs Don’t provide incentives for waste reduction or choosing less toxic (consumer or manufacturer)

4. SERA TYPICAL PROJECT ACTIVITIES  Activities / Research on projects International inventory - Options and Case studies Assessing product options – needs, precedent, gap, pros/cons, etc. Demand, elasticity, revenues (net) Administration (city, county, state)  Locally-suitable recommendations

5. SERA LOCAL ENVIRONMENTAL FEE / INCENTIVE OPTIONS  General /broad environmental fees and taxes* General, per-household, don’t provide product incentives  Product bans Force diversion, reduce improper disposal, reduce use, encourage use of alternatives  Retailer TakeBack* Product based, incentives for proper disposal, mfg  EPR / Stewardship* Product-based, takeback and ADF-type options  Product-based ADFs Product-based; fee at retail; incorp fees related to mgmt Polluter pay principle (encourage modified behavior by consumers and manufacturers)

6. SERA WHAT’S OUT THERE…

7. SERA MANY OPTIONS – WHAT ABOUT ADFs?  ADF goals: Change behavior (individual & production) Funding  removes materials from disposal stream  ADFs commonly considered on problematic materials: Hazardous Create litter Hard to recycle

8. SERA MANY EXAMPLES OF ADFs  Quick examples California Tire Fee and E-waste law (2004) Ireland, Italy, Belgium ADF on plastic single-use bags Broad-based product fees in Ontario, plus blue-box Bottle bills / deposit legislation  Retailer takeback with fees, privately-admin ADFs Particularly batteries, auto products, mercury products, sharps Bulky and/or HHW Paint Overseas examples of pesticide containers, batteries, cell phones, aerosol cans, packaging, appliances, mercury products, appliances, pharma, carpet, other And many others…

9. SERA ADF EXAMPLES / DISCUSSION  CA  DC  DE  WA  SF

10. SERA MATERIALS CONSIDERED / ANALYZED FOR ADFS+  Latex Paint  Oil based Paint  Universal waste / electronic devices  E-scrap  Aerosols  Fluorescent tubes & bulbs  Mercury Thermostats & switches  Propane / Butane cylinders  Batteries - alk & carbon  Batteries - Nicad / NiMetal Hydride  Batteries - Lithium  Automotive fluids  Tires  Sharps  Pharmaceuticals  Pesticides  Liquid fertilizers  Toxics / poisons  CDL / Treated Wood  Untreated wood  Cigarettes  Single Use Bags  Other Litter  Packaging - Fast Food Takeout  Packaging – Product  Bottle Bill / Expanded bottle bill products / liquor  Others suggested over the years: diapers, appliances, furniture, newsprint…

11. SERA SELECTING MATERIALS  Looked at: Cost to manage waste (currently & full recovery, etc.) Demand, supply, elasticities for each product  Revenue potential  Sales tax losses Administration options, costs, practicality Precedent / complexity Behavior change / incentives…  Feasibility

12. SERA MATERIALS ANALYZED FOR RECENT ADF PROJECTS  Fast food takeout packaging*  Pesticides, fertilizer, toxics  Paint  Aerosols  Single use bags  Cigarettes  Fluorescents  Hard to recycle containers (combinations of standard as well as wine, gable, aseptics, spirits)  Batteries (multiple types)  Universal electronics  Rationales: hazardous, litter, costly, environmental

13. SERA ESTIMATED REVENUE POTENTIAL (Thousands $) Thousands of dollars annually, one SERA client

14. SERA ESTIMATED LOST SALES TAXES (ONE EXAMPLE) To get NET revenue, and address tax concerns

15. SERA SHARE OF COSTS AT SAMPLE HHW

16. SERA HHW FACILITY COSTS BY MATERIAL (thousands) Total HHW costs – now, later. Costs relative to C/S recy, etc.

17. SERA ADF LEVEL NEEDED TO COVER MANAGEMENT COSTS AT 100% FOR ONE CLIENT - EXAMPLES Reasonable? Political? Change behavior? $?

18. SERA ADMINISTRATION DESIGN  Locally appropriate, specific to material City – generally fees / permits, etc. County – generally property tax (generator fee potential) State Dept of Revenue (or similar)– collects all sales tax and remits to cities and counties.  Investigate level of flexibility in structure of taxes, and “touches” most businesses in state (exceptions)  Designing… Availability, flexibility, payer population, product types / defn, who manages, “shared” issue, administration fee, wholesale / retail, economies of scale, enabling, auditability, set-up & on-going costs,...

19. SERA ON-GOING ADMINISTRATION COSTS

20. SERA PERFORMANCE CRITERIA Revenue potential Consumption incentives Environmental impacts (including tonnages in litter, disposal, have diversion options) Cost at HHW Admin costs vs. net revenues Complexity (of admin) Likelihood of legislation @ local / state / fed Political considerations Other…

21. SERA PERFORMANCE ON CRITERIA

22. SERA CONSIDERATIONS / RESEARCH  Big picture Goals, problems to be solved  Specific problem materials? Priority characteristics  Difficult disposal? Common / quick disposal? HHW / enviro / health? Litter?  Goal(s)  Change behavior, funding issues / raise funds / reduce recycling costs, reduce waste, signal mfg, litter? WHICH option? (ADF, enviro fees / taxes, bans, takeback, EPR / PS?)  Options analysis - $, costs, potential, impacts, administration

23. SERA CONSIDERATIONS / RESEARCH Consideration of Context  Legislation, budgets, etc. Priorities / criteria / weights  For the fee: political acceptability, sufficiency, admin efficiency / feasibility; feasibility for modification over time; equity; (neutrality; discrim)  For the incentives: source reduction, diversion, environmental goals, etc. Recommendation

24. SERA SUMMARY AND CONCLUSIONS  Costs of proper management rising. Revenue options limited (enterprise, etc.)… Integrated system Behavior changes / incentives to address?  What is workable at local level? Not EPR. Maybe Bans, enviro fees, ADFs.  ADFs are successful in affecting demand elsewhere, including many materials – pros/cons. Concerns about purchasing across lines… location matters Can raise revenues sufficient to address costs and behavior incentives (both levels) There are potentially-feasible ways of implementing / admin

25. SERA SUMMARY AND CONCLUSIONS  Materials and options selection depends on… Revenue potential, consumption incentives, Rationale, enviro impacts, Mgmt cost (HHW or other), administration feasibility & admin cost vs. rev potential, complexity, likelihood of legislation (local / state / fed), political will…  Analyzable at local level / local conditions. Clients pursuing several options  Things need to change to achieve goals. These types of options can help turn direction / longer term for funding and behavior / choices  More appropriate funding & behavior (consumer & manufacturer) Feasible local funding options beyond traditional…

26. SERA THANK YOU! Lisa A. Skumatz, Ph.D. SERA Inc Phone: 303/494-1178; Tollfree: 866-758-6289 email: skumatz@serainc.com; freeman@serainc.comskumatz@serainc.com; freeman@serainc.com www.serainc.com