Insights at UBC Sauder

Werner’s blog: Canada’s single-use plastics ban

Plastic bag in the ocean
Posted 2019-07-17
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On June 10, Prime Minister Justin Trudeau announced that his government will ban single-use plastics — which could include bags, straws and cutlery — in Canada in 2021 at the earliest. In this excerpt from his latest blog post, Werner Antweiler, Associate Professor & Chair, Strategy and Business Economics Division at UBC Sauder, discusses Canada’s plastic waste problem and the possible solutions from an economist’s perspective.

As has been widely reported, China has stopped importing plastics waste. In 2016 China imported about two-thirds of the world's plastic waste, much of it coming from the United States and Japan, but also a significant amount from Canada. It has been cheaper to ship plastic waste to China than to recycle it at home. Now that China has stopped accepting waste, it is being shipped to other Asian countries. However, these alternative locations have quickly reached capacity limits.

That so much plastics waste is shipped abroad reveals an underlying problem about recycling at home. Plastic recycling has not been economically viable in most instances. High-value plastics are mingled with low-value plastics, and many types of plastics are contaminated with food waste and other materials. So what can we do about all of that?

Reducing the amount of plastics waste, and reducing the amount of single-use plastics is an important part of this strategy. Canada's federal government has proposed a single-use plastics ban by 2021, joining a growing global movement. However, Canada is still far away from a "circular economy" when it comes to plastics.

Whether a ban is the most effective policy is debatable. A life-cycle analysis by the Danish Ministry of the Environment found that plastic carrier bags actually have a low overall environmental impact compared to alternatives (paper, textile, composite), and that this can be enhanced by frequent re-use and eventual use as a waste bin liner. The risk of an outright ban is the possibility of undesirable substitution effects, as many people still use bags to collect waste. Integrated waste management requires looking at all waste streams together, and it also requires making comparisons with alternative materials. If banning single-use plastics simply leads to an increase in other single-use materials, fixing one problem creates a new problem somewhere else. The broader problem is that there are too many single-use products, many of them made from plastics, but many made from other materials as well.

To reduce overall use of plastics, there needs to be a price on waste that truly reflects the negative externalities it causes. A fee on single-use plastics that captures the cost of disposal can help direct demand to more sustainable alternatives. Grocery stores used to give away shopping bags for free, which results in over-use because the "free" is actually a subsidy by the grocery stores. Many grocery stores have gone voluntarily to charging for bags, usually about 5 cents per bag. Several jurisdictions are moving in this direction as well. The City of Chicago imposes a US7 cent fee on plastic bags (2 cents go to retailers, and 5 go to the city). The state of Illinois, where Chicago is located, will impose a 10 cent charge for the rest of the state, with 3 cents going to the retailer, 4 cents to the Carryout Bag Fee Fund, and the remainder to fund recycling and waste management research. In the United Kingdom, introduction of a 5 pence fee resulted in an 85 per cent drop of bags, The Guardian reported in 2016. The UK announced it would raise the charge to 10 pence.

From an economist's perspective, the bag fee is the way to go, rather than an outright ban. While it may appear that a ban is simpler and "costs nothing," this no-cost notion is not quite true. Plastic bags still provide a useful service, and this needs to be replaced with something else. California has banned single-use plastics since 2017, and the LA times reported that the world didn't end, with very few complaints. Still, a ban is a drastic measure, and it may direct demand to unsuitable alternatives. The point of environmental policy is to bring the private cost and social cost of economic activities in alignment—and this means finding the correct price that corrects the environmental externality. A modest bag fee (10 cents per bag is about the right order) will accomplish this mission. Moreover, a bag fee should also apply on single-use paper bags, appropriately differentiated. (After New York State decided to bring in a single-use plastics ban similar to California, New York City decided to impose a US5 cent fee for single-use paper bags). Similar recycling fees should be applied to other plastic products in order to encourage appropriate substitution. The way to guide policy making in this area is through life-cycle assessments that identify the full cost of use relative to alternatives.

While a plastics fee is the first-best environmental policy, are there reasons to embrace an outright ban as a second-best option? The simplicity of the ban, as well as concerns about overlapping federal-provincial jurisdiction on this matter, may make a ban the “safer choice”. The alternative, in my view, would be to set a national plastic waste reduction target and cooperate with the provinces to choose their preferred approach to meet the target—including plastic waste fees. The federal ban would then only apply to provinces that opt to do nothing.

All considered, the federal ban on single-use plastics is a defensible measure but not the first-best measure. A fee on single-use plastics would be better than an outright ban. The federal government should, therefore, give provinces the option to implement alternative policies that meet a federal reduction target (e.g., 85 per cent by 2025), thus giving provinces the option to work with fees instead of bans.

Reducing the use of single-use plastics will not alone solve the ballooning plastics waste problem. We need a more integrated and holistic nationwide plastics waste management strategy that gets us closer to the notion of a circular economy. This includes more product stewardship by manufacturers who need to take greater responsibility for the use and disposal of the products they make.

Improving Canada's recycling system can also help. Other countries show how to do it effectively. When I visit Germany, I marvel at the vending machines in supermarkets that take back recyclable bottles and cans of all types, which are subject to a deposit return fee. As described in Has Germany hit the jackpot of recyling?, the system generates high recycling rates because single-use plastic bottles also come with a higher deposit (25 cents) than reusable bottles (8-15 cents).

Perhaps we should thank China for creating today's "plastics crisis" by refusing our waste. It forces us to consider new policies for waste reduction, innovation into more sustainable forms of packaging, and adopting more efficient recycling and waste management systems.