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Impact Analysis of a Beverage Container Deposit Program in Maryland

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Impact Analysis of a Beverage Container Deposit Program in Maryland 2011 Impact Analysis of a Beverage Container Deposit Program in Maryland Photo Credit: Alan Cressier, USGS Prepared for the Waterfront Partnership of Baltimore, Inc. and the Abell Foundation Prepared by the University of Maryland Environmental Finance Center (EFC) December 15, 2011 1 This document was prepared by the following partners: Environmental Finance Center The Environmental Finance Center (EFC) is located at the National Center for Smart Growth Research and Education at the University of Maryland in College Park. The EFC is a regional center developed by the Environmental Protection Agency to assist communities and watershed organizations in identifying innovative and sustainable ways of implementing and financing their resource protection efforts throughout the Mid-Atlantic region. The EFC is nonadvocacy in nature and has assisted communities and organizations in developing effective sustainable strategies for specific watershed protection goals for a variety of clients including state and local governments, watershed organizations, and land trusts. The Center for Integrative Environmental Research The Center for Integrative Environmental Research (CIER) at the University of Maryland addresses complex environmental challenges through research that explores the dynamic interactions among environmental, economic and social forces and stimulates active dialogue with stakeholders, researchers and decision makers. Researchers and students at CIER, working at local, regional, national and global scales, are developing strategies and tools to guide policy and investment decisions. ECONorthwest ECONorthwest is an economic consulting firm located on the west coast and provides an unbiased and thorough economic analysis to private and public sector clients throughout the United States. ECONorthwest is nationally known for its rigorous analyses in the area of environmental economics. In particular, ECONorthwest has expertise in benefit-cost analysis and economic impact analysis across a wide range of policies and programs. THE ABELL FOUNDATION Support for this project was generously provided by the Waterfront Partnership of Baltimore, Inc. and the Abell Foundation. 2 Table of Contents Section 1: Summary Findings ..................................................................................................................................................................................................................................................4 Section 2: The Impacts of Beverage Container Deposit Program ..............................................................................................................................7 The problem of litter ......................................................................................................................................................................................................................................7 Beverage containers as part of the litter stream ..................................................................................................................................................9 Beverage containers in Maryland’s litter stream .............................................................................................................................................11 Litter reduction program options . ......................................................................................................................................................................................12 Spotlight – Litter Reduction Alternatives in Delaware, Missouri, and North Carolina .......................19 The impact of beverage container deposit programs on recycling efforts ........................................................22 The impact of deposit program costs on beverage prices ...........................................................................................................27 The impact of deposit programs on GHG emissions ..............................................................................................................................28 Section 3: How Could a Litter Prevention Container Deposit Program Work in Maryland? ........................................30 Structure of existing beverage container deposit programs ...................................................................................................30 Current state of existing beverage container deposit programs .........................................................................................37 Compatibility with local recycling programs ......................................................................................................................................................38 Addressing fraud ............................................................................................................................................................................................................................................40 Section 4: Recommendations and Conclusion ..................................................................................................................................................................................42 Recommendations .......................................................................................................................................................................................................................................42 Conclusion .................................................................................................................................................................................................................................................................44 Project Team ............................................................................................................................................................................................................................................................45 3 Section 1: Summary Findings In October 2011, the Environmental Finance Center (EFC) at the University of Maryland was asked to investigate the feasibility of a beverage container deposit program in the state of Maryland. The objective of the study is to quantify a beverage container deposit program’s contribution to Maryland’s goals to reduce greenhouse gas (GHG) emissions and stormwater related trash. In addition, the EFC project team was asked to determine what monies might be available to the state as a result of unredeemed beverage container deposits. Beverage container deposit programs currently exist in ten states across the country and are under consideration in several others. The unique nature of disposable beverage containers provides the opportunity to use a fee-based system to incentivize the proper handling and disposal of these items. Though virtually all of the existing programs have been successful at achieving their stated goals, deposit programs remain highly controversial and are vigorously challenged by a number of industry groups. Our goal was not to advocate either for or against these deposit systems, but rather to inform decision-making within the state of Maryland as it considers legislation in the future. The following are the team’s key findings associated with our research: The impact on litter reduction. Litter reduction is clearly the primary benefit of beverage container deposit programs. Though beverage containers are only a fraction of the litter stream, deposit programs have proven highly effective at reducing the amount of litter in the communities that have adopted these programs. In fact, there is little evidence that any other program, in and of itself, is nearly as effective as deposit programs at reducing litter rates. That said, some beverage deposit programs are better than others at reducing litter rates. Ultimately, the impact on litter is determined by two factors: 1) the redemption rate; and 2) the number of container types addressed by the deposit system. There is little evidence that deposit programs lead to significant reductions in other components of the litter stream. The impact on recycling. One of the key features of deposit programs is that they move beverage containers out of the waste stream into the recycling stream. In fact, the states that have implemented deposit programs have experienced a marked improvement in recycling rates. However, the long-term sustainability of beverage deposit systems requires a market for the scrap materials that are produced as a result of increased recycling rates. The market price for scrap materials fluctuates based on economic conditions; as a result, the value of scrap materials is currently not high enough to support the costs of running deposit programs. However, it is likely that the market price of scrap materials will increase in the future, thereby creating greater opportunities to support deposit programs through recycling program revenue. 4 The impact on local recycling programs. Though beverage container deposit programs have a demonstrated positive impact on recycling rates, these benefits come with costs. Specifically, local recycling programs may see a reduction in the number of beverage containers collected through curbside pick-up. And, because aluminum beverage containers in particular represent some of the more valuable sources of scrap materials, local recycling systems could see a reduction in revenue. Therefore, though recycling rates and efficiencies will almost certainly improve statewide,
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