Effectiveness of deposit-refund systems for household waste in the Netherlands: Applying a partial equilibrium model

Deposit-refund schemes (DRS) are basically a combination of two instruments: a tax on the purchase of a certain product, and a subsidy on the separate collection of the same product in its after-use stage. They can be efficient policy instruments to encourage reuse and recycling. However, empirical studies on impact of DRS systems on recycling rates are hardly done. In this paper, we applied the Fullerton-Wu model, a partial equilibrium model, to simulate the impact of introducing mandatory DRS for small electric appliances and batteries in the Netherlands. For small electric appliances, a deposit-refund rate of €5 to €15 per appliance would lead to an increase in the recycling rate (recycled appliances as a percentage of total amount of appliances disposed of) from 60.7% to 64.7% and 76.4% respectively. For batteries, a DRS would increase the recycling rate from 86.9% to between 87.2 and 89.2% depending on the deposit tax level ranging from €5 to €20 per kg and the price elasticities assumed (low and high). Obviously, the performance of DRS in terms of additional recycling is stronger in cases where current recycling rates are relatively low. Moreover, the pre-existence of an infrastructure for separate collection would make small white goods an interesting candidate for this instrument.