Extended producer responsibility for consumer waste: the gap between economic theory and implementation

Abstract

Although economic theory supports the use of extended producer responsibility (EPR) to stimulate prevention and recycling of waste, EPR systems implemented in Europe are often criticized as a result of weak incentives for prevention and green product design. Using a stylized economic model, this article evaluates the efficiency of European EPR systems. The model reveals that the introduction of static collection targets creates a gap between theory and implementation. Static targets lead to inefficient market outcomes and weak incentives for prevention and green product design. The minimum collection targets should be complemented with a tax on producers for the non-collected waste fraction. Because such a tax internalizes the cost of waste disposal, more efficient price signals will lead to better incentives for waste management in a complex and dynamic market.