Once again, the Province of Alberta has taken the lead in improving the collection and recovery of beverage containers. Last summer the province undertook an extensive regulation review process for its existing deposit-refund program, which covered all beverage containers (both refillable and non-refillable) but excluded milk and any dairy-based beverages. The consultation, led by an all-party committee of the legislature, recommended a series of system improvements, most notably increasing the deposit levels and adding dairy beverage containers to the existing program.
On October 22, 2008 Alberta Environment and the Beverage Container Management Board (BCMB) announced that part its Too Good to Waste strategy would include a new beverage container recycling goal of 85 per cent, up from the existing 75 per cent. Under the new program, deposits will increase from 5 to 10 cents and 20 to 25 cents as of November 1, 2008, and all dairy beverage containers will be placed on deposit by June 1, 2009. For the most part, BCMB reports that Albertans are supportive of these changes, based on over 300 calls received after the announcement.
Environmental advocates throughout North America have been calling for increased deposits in programs with deposits of just five cents for many years. They argue that the declining value of the nickel (see figure next page) plays a role in declining recovery rates. Most deposit refund systems were established in the late 1970s and early 1980s and had a five cent refund on containers. The refund levels have not changed significantly within the last few decades and, as the value of the refund has declined over time, accordingly so has the impact of the economic instrument.
In the study Evaluating the Relationship Between Refund Values and Beverage Container Recovery prepared for the BCMB in 2003 by CM Consulting, the findings state:
“A strong, positive relationship exists between higher refund levels and corresponding recovery rates in Canada (r2 = .82) and internationally (r2 = 0.80), supporting the hypothesis that the level of the economic incentive to return containers (“the refund”) is a key driver of recovery rates; and data indicates 10-cent refund levels (~86.2 per cent) result in higher recovery rates than 5-cent levels (~75.1 per cent), and the system for refillable beer (~97.2 per cent) engenders still higher recovery values in Canada due to the high perceived refund associated with the returns of multi-container packs.”
In the Alberta system, unredeemed deposits and material revenue are used directly to off-set system costs. If the recovery rate on bever- age containers increases by 10 per cent, then the pool of unredeemed deposits will increase as well. While the number of unredeemed containers will decline, the value of unredeemed containers will double, which means that the revenue from unredeemed deposits will increase, along with material revenue from increased collection. This would seem to be a “win-win” for everyone, except those consumers who choose to discard their container and lose10 cents instead of just 5 cents — a more aggressive penalty for polluters.
In spite of supportive science and the possibility of a more sustainable financing system, some industries continue to fight higher deposits. In its submission to the standing committee, Refreshments Canada suggested that, “Raising deposit levels would likely amount to nothing more than a ‘cash grab’ out of consumers pockets, with virtually no real improvement to overall diversion in Alberta.”
This sentiment seems to get closer to the real issue that most of the beverage industry has with the concept on increasing deposit levels: the impact on sales. Talk to any beverage company and most believe that a 5-cent increase in deposit levels will have a negative impact on sales.
Truth is, several factors can impact sales of beverage containers like seasonal temperatures, economic climate, etc. As such, it’s difficult to accurately measure the economic impact of a deposit increase on sales. To date, no research is available that attributes a direct decline in sales as a result of a new deposit, or an increased deposit. However, it’s worth identifying the impact on sales from front-end fees like container recycling fees (CRF) in BC and Alberta, new deposits, or deposit increases, which can be examined by analyzing sales before and after implementation.
According to Alberta sales history, there was no impact on the upward sales trend of beverage sales after implementation of a CRF. According to Encorp Pacific there was also no impact on beverage sales after such a fee was implemented in BC in 1999.
Deposits were increased in California in 1989 from one to two cents; in 1993 from two to 2.5 cents; and in 2004 from 2.5 cents to four cents. More recently, in January 2007 the deposit was further increased from four to five cents (for small units) and to 20 cents (for large units). Sales figures show no impact as a result of increased deposit values.
Hawaii tracked sales of beverage containers pre-and post-introduction of a deposit-refund program there, which charges a five cent deposit, plus a one cent container recycling fee. Again, there was no downward impact on sales. Bottom line: there’s no evidence that deposits or recycling fees on beverage containers impact sales.
Milk’n the system
The dairy industry in Alberta resisted being forced into the existing deposit-refund program for many years with a first memorandum of understanding (MOU) signed in 1998 that stipulated a voluntary goal for milk jugs of 75 per cent. More recently (2007), a new MOU was signed between the ministry and the dairy industry for one year that includes targets of 62 per cent and 55 per cent for HDPE jugs and carton respectively, with an “ultimate” goal of 75 per cent.
The Plastic Milk Jug Recycling Program was launched in 1999 for milk jugs and expanded to include milk cartons or polycoat containers in 2002. The program is an industry stewardship initiative through which Alberta’s dairy industry supports the voluntary collection and recycling of milk jugs and cartons.
Milk jugs and carton recovery by municipal authorities are financed partially by the dairy industry. More specifically, a guaranteed market value of $400 per tonne for jugs and $225 per tonne for cartons is provided by the industry directly to municipalities, plus a $40 per tonne transportation subsidy for some municipalities.
Compared to other Canadian provinces, Alberta’s voluntary program was the most successful with recovery rates of 60 per cent for jugs and 23 per cent for cartons. Failure to meet the lowered goals set out in the new MOU prompted the standing committee to recommend that these containers finally be included in the deposit-refund program. Starting June 1, 2009 all dairy beverage containers will carry a deposit of 10 or 25 cents redeemable at provincial depots. This will be a first in North America.
Performance rates in Alberta over the next couple of years will establish if program changes are successful. Other provinces, especially British Columbia, will monitor the achievements closely and may well follow Alberta’s lead.
Clarissa Morawski is principal of CM Consulting based in Peterborough, Ontario. Contact Clarissa at firstname.lastname@example.org
“All dairy beverage containers will carry a deposit of 10 or 25 cents – a first in North America.”