Externalities

What it is

The concept is old, uncontroversial and almost never where the argument is. The argument is always about who the third party is and how much they are paying.

Why it is the economic spine of the packaging story. The seed book's argument is that single-use packaging is cheap because the disposal cost sits with municipalities. A drinks company pays to make a bottle and to ship it. Collecting it, sorting it, landfilling it or fishing it out of a river is paid for by a council, a taxpayer or nobody. On that account the refill-and-return system that single use replaced was not beaten on cost; it was beaten on whose cost.

The counter-case in this publication's work is the same point measured rather than argued, and it is stronger for being measurable. A material recycles where there is a buyer at the other end and does not where there is none.

And the measurement that makes the point hardest to dismiss. Attach money to the container and the number moves again. Infinitum, the operator of Norway's deposit return system, publishes return rates of 92 per cent for aluminium and 95 per cent for plastic bottles on a system running since 1972. Those are the scheme operator's own published figures, labelled as such, and no independent audit of them was located.

That is an externality being internalised and measured. A deposit puts part of the disposal cost back into the price, and the behaviour follows the money rather than the message.

The displacement clause is the same idea inside a model. Roland Geyer and colleagues state that recycling reduces future plastic waste generation only if it displaces primary production, and that because this is a counterfactual it is extremely difficult to establish. A recycled tonne that sits alongside a new tonne rather than instead of it has moved a cost without removing one.

In effect

In the government record: the same consumers, three rates

In the Environmental Protection Agency's 2015 dataset, the United States rate for all plastics was 9.1 per cent, while polyethylene terephthalate bottles and jars ran at 29.9 per cent and high-density polyethylene natural bottles at 30.3 per cent in the same year. Same shoppers, same bins, a threefold difference by material, which is what a sorting and resale market looks like from the outside.

In policy: moving the bill rather than changing the shopper

Saabira Chaudhuri's final chapter argues for polluter-pays producer responsibility, minimum recycled-content mandates, penalties and radical simplification of materials, and then lists a few consumer actions before calling them, in her words, small potatoes, with the real power sitting in regulation. That is an externality argument stated as policy: the proposal is to move the cost, not to persuade the buyer.

In commerce: two prices that are not two costs

The reason a thin plastic pouch undercuts a refillable glass bottle on a shelf is partly chemistry and logistics and partly that the pouch's end of life is not in its price. A buyer comparing the two prices is not comparing the two costs, which is why the marks on the packet end up doing work a price would otherwise do.

What it does not say

It does not quantify any external cost. Nothing here is an estimate of what plastic disposal costs a municipality, and this publication holds no such figure.

It does not say prices are wrong by a knowable amount. It says where to look: at who pays for the part of the product nobody wanted, and at whether any mechanism puts that payment back into the price.

It is not a research claim and it has no single originator. It is a standing concept of welfare economics, used here as a frame, and the specific figures on this page belong to the sources named below.

And it does not say persuasion never works. It says that in this case the documented gains came from mechanisms, deposits and material markets, and not from messages, and that is a claim about this case.

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