Friends of the Behavioral Economics Club, this week we present the paper “How Covid-19 could change the economics of the plastic recycling sector”, by Issifu, I.; Worlanyo Deffor, E. And Sumaila, U. S. (2021), in which authors analyze how the pandemic has affected the consumption and recycling processes of plastics and how can we stop the negative resultant impact.
When the first cases of Covid-19 were identified, few anticipated the speed and magnitude of the impact it will have on the global economy. In fact, no one could have imagined the extent to which this new virus would close our schools, stores, airports…, or even how it would affect the price of oil.
Like most sectors, plastic recycling was affected by the pandemic, but the extent of the impact is still unknown.
Plastics are the soul of modern life, of the life we know today. The bags in which we carry food from the supermarket to home, the bottles of water, the containers… plastics have penetrated many aspects of our society.
They are designed to be durable and, due to their low cost and versatile properties, in 2015 their production reached around 8.5 billion tons.
With the pandemic, a new concern has arisen: the increase in the production and consumption of plastics. For example, we all need some kind of protection against the virus and most of the population has obtained it in the form of masks, gloves or screens, all of which are made of plastic. In February 2021, China increased its production of single-use face masks 12 times a day to meet the high demand.
That is, the need for plastic seems to be stronger now due to the pandemic, which represents a growing environmental threat. In landfills alone, 40% of the content is plastic.
With the increase in the production and use of plastic, estimations indicate that the amount that reaches the environment each year will double by 2050.
In addition, the increase in the production of personal protective equipment is unprecedented. But we must add the fact that for a time the collection and classification of plastic waste was paralyzed in many countries due to strict confinement and social distancing measures.
At the time the article was published (late 2021), the demand for personal protective equipment exceeded the global supply. Masks have become the most sought-after utensil in almost the entire world, along with respirators with high filtration power, gowns, half-face respirators…
Another way the pandemic affected global plastic recycling is through falling oil prices. As we know, oil is the most important raw material in the production of plastic and therefore its price has a great influence on the price of plastic and the profitability of the entire recycling process. That is, the lower the price of oil, the lower the price of plastic and, therefore, the less profitable the recycling process becomes.
Considering all the information above, it is not surprising that the idea that turns out in our heads is that we must apply public policies and programs aimed at the urgent recycling of waste, especially plastics.
What are the strategies proposed by authors? In the first place, the deposit-reimbursement system, which implies the payment of a deposit for the purchase of a polluting product. This deposit can be refunded once the product or its waste is returned to the seller, or deposited at an established collection point. This system could encourage proper waste management and, therefore, recycling.
Another idea is subsidies and tax incentives. The tax system can be used to subsidize the use of recyclable products, while loans and subsidies can be used more broadly for the adoption of innovative waste management technologies. In addition, financial and technical support could be provided to recycling companies to facilitate the collection and processing of personal protective equipment.
There is also price differentiation. The possibility of using it as a tool to promote plastic recycling revealed the willingness of consumers to pay a higher price for products made from recycled plastics, which could then be used to finance the collection and transport of plastic waste, and reuse in recycling.
Until it is decided how and when some measure will be implemented, we must encourage, for now, people and companies, not to throw away, but to recycle, in order to try to reduce plastic waste as much as possible.
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