Pricing products' negative externalities at end-of-life using eco-modulation: Discussion from case studies

Abstract

Does an efficient and flexible mechanism exist to address negative externalities of products, or are we doomed to grow the list of product standards? In this paper, I open the discussion whether eco-modulation in the framework of collective extended producer responsibility (EPR) could be able to spur the design of more environmentally sound products at end of life. In Europe, EPR for final products has mainly been implemented in the form of collective systems, where producers pay a fee per quantity of items placed on the market to a central organisation. This compliance fee represents the average cost of treating waste for a given product stream. Since waste management costs are averaged across producers, such collective EPR schemes have been criticised for hindering individual internalisation of products’ end-of-life externalities. To deal with these critiques, French public authorities have imposed eco-modulation to EPR collective systems. Eco-modulation consists in penalising or rewarding individual design choices of producers, using financial incentives. The European Commission is now planning to revise its directive Dir. 1994/62/EC to provide guiding principles on eco-modulation for packaging for all EPR organisations across Europe. In general, eco-modulation is becoming increasingly relevant on the European scene. Therefore, I aim at reflecting on the efficiency of eco-modulation in addressing products’ negative externalities at end-of-life, by analysing early feedbacks and data from French EPR systems.