On the joint dynamics of the economic and environmental performances for collective take-back systems

Abstract

The aim of this paper is to help regulators develop efficient recovery targets, to deliver desirable economic and environmental outcomes for collective product take-back systems. Two environmental measures—waste generation and energy consumption—are utilized jointly to evaluate the environmental performance of the legislation, whereas economic surplus is used to indicate the economic outcome. We develop a bi-level multi-objective formulation to capture the dynamics between a regulator, a producer, consumers, and the environment. A case study based on BSH Bosch and Siemens Home Appliances and Germany's WEEE take-back scheme is used for deriving policy and managerial insights. We find that the optimal waste generation is robust among all the Pareto solutions in every tested scenarios, as long as recycling is cheaper than landfilling. Our findings also hint the potential benefits of using subsidiary tools, such as a landfill tax and an energy cap, to enhance the overall environmental performance of take-back legislation. From a methodology perspective, a unique feature of the paper is the use of a multi-objective framework for take-back legislation that enables us to characterize the Pareto frontier. Secondly, from the practical perspective, this paper can help regulators with a policy design decision support tool that gradually guides to the most preferable policy, balancing the trade-offs between the three objectives.