The plastic bags ban, is there an alternate solution?

Business Spectator on China and the ban on ultra-thin plastic bags.

China will become the latest country to outlaw ultra-thin plastic bags, when a ban takes effect on Sunday, in a bid to cut pollution and save resources.

The ban, announced by the State Council in January, halts the production of bags that are thinner than 0.025 mm and forbids their use in supermarkets and shops.

It also requires retailers to charge customers for thicker plastic bags not covered by the ban.

Environmentalists say plastic bags can take up to 1,000 years to disintegrate and pose threats to marine life, birds and other animals.

…a list of some of the countries that already restrict plastic shopping bags or plan to do so:

AFRICA – Rwanda and Eritrea banned the bags outright, as has Somaliland, an autonomous region of Somalia. South Africa, Uganda and Kenya have minimum thickness rules, and Ethiopia, Ghana, Lesotho and Tanzania are considering similar measures.

AUSTRALIA – Coles Bay in Tasmania became “Australia’s First Plastic Bag-Free Town” in April 2003. Dozens of others followed suit. In January 2008, the environment minister called for supermarkets to phase out use of the bags nationwide by the end of the year.

CHINA – The ban on ultra-thin bags that goes into force on June 1 will cut pollution and save valuable oil resources, the State Council, or cabinet, says. In May 2007 Hong Kong proposed a 50 cent “polluter pays” levy on plastic shopping bags.

INDIA – The western state of Maharashtra banned the manufacture, sale and use of plastic bags in August 2005, after claims that they choked drains during monsoon rains. Other states banned ultra-thin bags to cut pollution and deaths of cattle, sacred to Hindus, which eat them.

Check out the rest of the list.

Plastic bags are a big issue, no doubt. With some estimates of a consumption rate of 1 million per minute around the world (or 500 billion annually), we need a solution that works.

Is banning plastic bags the best way to solve this issue? Is there an alternate model? Is there a market based solution to this? If so, how can it work? Are there any success stories?

Atanu Dey proposed an alternate, market based solution, to this plastic bag conundrum in the context of the ban in the Western state of India, Maharashtra.

The mechanism that I would recommend is simple. For every plastic bag manufactured, collect a disposal fee. Let’s say it is Re 0.10. This fee gets passed on to the consumers – the people who ultimately decide whether to accept a plastic bag at the store or to bring their own re-usable bag, the people who decide whether to chuck the plastic bags on the streets after use, etc. The next step is to have collection centers where for every plastic bag turned in, Re 0.08 is returned.

What happens if this method is used? First, the number of plastic bags used will go down. Simple econ 101: price goes up, quantity demanded goes down. This is good for the economy since plastic bags are made out costly petroleum.

Second, discarded plastic bags are a source of income for those who take the trouble to collect them and turn them in. From what I have seen in Mumbai, in a couple of hours, one can collect 500 of them and thus make Rs 40 by turning them in. My conjecture is that following this sort of scheme, you will not find a single plastic bag in the streets of Mumbai.

And as Prof. Joshua Gans has reported before, the Irish tax on plastic bags has already provided a model to look at as reported in a paper published in Environmental and Resource Economics.

The effect of the tax on the use of plastic bags in retail outlets has been dramatic—a reduction in use in the order of 90%, and an associated gain in the form of reduced littering and negative landscape effects. Costs of administration have been very low, amounting to about 3% of revenues, because it was possible to integrate reporting and collection into existing Value Added Tax reporting systems. Response from the main stakeholders: the public and the retail industry, has been overwhelmingly positive. Central to this acceptance has been a policy of extensive consultation with these stakeholders. The fact that a product tax can influence consumer behaviour significantly will be of interest to many policymakers in this area. This paper analyses the plastic bag levy success story and provides insights and general guidelines for other jurisdictions planning similar proposals.

Interestingly, the Chinese model has both a ban (albeit, more like a standard than a total ban) and tax. It will be interesting to see what happens in this scenario. More from Reusable Bags and a list of countries who are banning or taxing in some detail.

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7 thoughts on “The plastic bags ban, is there an alternate solution?

  1. Yes there is, and it is very simple, or as Holmes would (not) say, “Elementary, my dear Watson.”

    BYOB – bring your own bag, just like our parents used to, when going grocery shopping.

    Point is, neither paper or plastic is environmentally-friendly and both have externalities, though plastic gets the bum rap (and for good reasons).

  2. BTW, why do the current economic models have externalities (that the businesses conveniently pass on to the tax-payers) and what efforts are on to improve the models and make them more representative and reflective of how nature/world actually works? Lots of economists mention Friedman with a light in their eyes whereas if someone were to mentioned Paul Hawken to them, it would probably draw blank stares. :)
    (You might be an exception, and no, I’m not an economist.)

  3. I’m totally agree with the suggestion of banning the usage of the plastic bag because indirectly it can cause a destruction to our world. Nowadays, there’s a lot of alternative ways thst can replace the plastic bag. Instead of using the plastic bag that can only give us bad cause, we can just use the reusable bag. Its not just can save our world but it also can help us in educating the public about how bad it is for us to use the plastic bag. For example, when u go to the supermarket during u want to pay ur stuff at the counter. u’ll ask the cashier to all of ur stuffs in the bag that u brought from home. By doing that, it will be a wake up call for the people around u and they become more aware about it. And i think that plastic bag is just a waste of money because at the end of the day,u’ll just throw it away into the dustbin.

  4. Ban plastic bags its Ok, but what about the bags we use for packing food stuffs like chips, frozen item bags, please can i get the solution which would be less cost wise.

  5. So does any one thing that those grocery chains like Reliance, etc. are giving us the carry bags for free before? It is all passed on to the consumer. Now they take advantage and charging us another Rs 3/- for a bag. Plastics are used in millions of ways and we will not be able to get rid of that. My personal opinion is that “Recycle” is the answer, there should be a separate trash collection for plastics and glasses (most recyclables). Most of the cities do not even have a proper trash collection, first Govt should go and check that rather than advising richer to become more richer.

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