This study models the economic impacts of implementing extended producer responsibility legislation for packaging waste in New York State, as outlined in Bill S1185B. New York State is one of several jurisdictions across the United States looking to adopt producer responsibility legislation, which would obligate producers to pay for the recycling costs of more than 30 individual materials commonly used in printed paper and packaging.
Increasingly, a diverse range of stakeholders, including local governments, packaging producers and waste service providers are recognizing the role that producer responsibility can play in promoting recycling and a sustainable waste management system.
Few studies to date have attempted to quantify what the adoption of EPR legislation will ultimately cost producers, and how, if at all, the price of consumer packaged goods changes in response to producer responsibility. Previous investigations into the topic were conducted in Canadian jurisdictions, with no clear consensus regarding whether EPR legislation has a positive or negative impact on cost of living for consumers.
Using best available data, this study combines data from both New York State, as well as data from Canadian jurisdictions to model both the direct, indirect, and induced effects of EPR legislation on the New York State economy.
Modeling for this study is separated into two phases – 1) quantifying the direct producer obligation given estimated quantities of recyclable materials generated/recovered in New York State, 2) Quantify the indirect/induced effects resulting from an increase in the producer obligation, and how that ultimately impacts the price of consumer packaged goods for households in the State.
Based on estimated quantities of printed paper and packaging generated/diverted in New York State, the direct impacts of EPR legislation are estimated to be $803.2 million dollars annually. This figure includes costs associated with administrative expenses, promotion and education and ongoing data expenses, but do not include any additional investments in recycling infrastructure that may be required or baseline data collection.
Using an economic input/output model that has been regionalized for New York State, this study modeled the indirect and induced economic impacts of EPR legislation resulting from an increase in the producer obligation ($803.2 million). Our modeling assumes that producers will not internalize any of these costs, and that they will pass this cost onto the consumer, or other stakeholders within the supply chain. Our modeling also assumes that the price of packaged goods (including the price elasticity of packaged goods) is a function of locality.
Given that the overall price of a packaged good varies depending on how sensitive the price is to changes in the cost of inputs, this study modeled more than 660 different types of packaging most commonly consumed by households from 30 different sectors. Using a log-linear regression model, we attempted to model how cost of living for households in New York State would change in response to the adoption of EPR legislation. It should be noted that the price of consumer packaged goods are particularly sensitive to changes in the price of inputs. Differences in price elasticity were observed across material categories.
Based on the modeling of indirect and induced effects attributable to EPR legislation, we arrive at a final impact multiplier that ranges from 3.6x to 5.4x. The multiplier is intended to capture both the direct, indirect and induced impacts of adopting EPR legislation in New York State. Using these multipliers, an $803.2 million-dollar direct cost to producers (resulting from EPR legislation) results in a $2.9 billion to $4.17 billion dollar impact on the economy of New York State.
The total impact on “basket of good” pricing (packaged goods) ranges from 4.01% on the low end, to 6.35% on the high end. Stated alternatively, this translates into an additional $36 to $57 per month in grocery costs for the average family of four in New York State. This study found that the decision to adopt producer responsibility legislation for packaging waste has an unintended effect that disproportionately affects low income families.