Bottle deposits

On a recent business trip, a conversation arose with the locals  about the state’s beverage container deposit and refund policy, which is meant to encourage folks to recycle.

It’s also caused a cottage industry for people to collect containers in neighboring states that do not require deposits and transport them into the state to collect the deposit fee.

To solve this problem, the state wants drink makers to produce unique packages that will only be sold in that state.

Regulation begets regulation.  The deposit/refund scheme causes abuse, so more regulation comes along to fix the abuse.  This will likely result in more unintended consequences and more regulation and bureaucracy to fix those.  Few people question whether the whole scheme is worth it or not.

However, the locals recognized the special container fix would likely raise prices for beverages in the state as manufacturers have to separate batches of beverages made for that state and change their distribution processes to make sure only outlets in their state get those containers.  It may also result in less choice as smaller players may opt out of selling in that state.

I mentioned that my state has no such laws, yet people there seem to recycle just fine.  It made me wonder if anyone has studied whether a container deposit scheme results in any more recycling or if states and localities just adopt such schemes because they sound good.  Anybody know?

One more thing, even if the scheme produces more recycling, how would we know if it’s worth it or not?  Certainly, some folks will say we must conserve landfill space at all costs, but that’s easy to say when you don’t have to pay the costs.  I wonder if those same people would conserve landfill space if they were directly faced with the costs.


3 thoughts on “Bottle deposits

  1. Yes, it has been studied, bottle bills work! States with curbside recycling recycle around 30% or less of their containers, while states with bottle bills recycle 70-95%. So recycling rates about triple, litter is reduced, costs to local government and tax payers is reduced. Checkout . The cross border redemption issue is exaggerated, and the real solution to the problem would be a national bottle bill. Deposit programs actually are cost effective, effective at tripling recycling rates, AND effective about reducing litter. So what if beverages go up a few cents, I’d rather the containers not end up on the ground or landfill.

    • Thanks for the comment. I’d be interested if you could provide links directly to the information supporting your statistics.


      This is an example of the point of the last paragraph of my post. You don’t mind forcing everyone to pay more for beverages so long as it meets your priority. If you paid those few cents on everyone’s beverage for them, your priorities might be different.

  2. Seth:

    In Milton Friedman’s book Free to Choose, Friedman explains that just about everything we do causes some sort of externality. This concept has been widely know before Friedman’s publication of Free to Choose circa 1980. Friedman was merely reiterating.

    Friedman goes further to explain that many believe that you can eliminate/reduce/regulate a particular externality by government intervention. The problem is, those that are quick to advocate government intervention fail to see (or omit) that the old externality is merely replaced with a new externality. That is to say, government intervention does in fact cause a new externality because everything we do [including government intervention] causes some sort of externality.

    In many/most cases the externality or new set of externalities are not only worse than the original externality or set of externalities -but- the new externality/set of externalities is/are more expensive than the original externality/set of externalities. Why more expensive? One has now created a massive and expensive bureaucracy to oversee the new externality/set of externalities.

    Your post is an excellent example of government intervention causing one externality to merely be substituted for another externality that then triggers cascading externalities that causes cascading government intervention.



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