Commentary

Shifting recycling costs to producers an easy way to raise the cost of groceries

on

Is a $30 or more increase in your monthly grocery bills worth “saving taxpayer dollars” on recycling?

There are two bills in the Maine Legislature, LDs 1471 and 1541, that seek to shift the costs of recycling programs to producers of products that use recyclable packaging. The supposed benefit is that they will save taxpayer dollars, but in reality, the costs will just shift to producers and be passed onto customers, likely netting Mainers nothing. LD 1471 has already been defeated while LD 1541 was approved Wednesday in the House by a 84-59 vote. The bill still awaits votes in the Senate today.

A recent study by Dr. Calvin Lakhan of York University found that, under LD 1541, average monthly grocery costs for a family of four in Maine will increase by at least $30, or as much as almost $60, depending on the costs incurred by producers.

The study sought to examine the impacts of Extended Producer Responsibility (EPR) legislation on the price of consumer goods through modeling various recycling costs against a “basket of goods.” 

The price of each county’s “basket,” the study found, increased anywhere from 101% to 110% due directly to increases in manufacturing costs as a hypothetical result of LD 1541.

Lakhan assumes Maine producers will not simply absorb the $99.6 million of recycling costs thrust on them by LD 1541 and will, as a solution, pass on the increased expenditures to consumers. He backs up this assumption based on the “Pay in Model” adopted by multiple Canadian jurisdictions who took up EPR regulations.

A key argument for EPR regulations is that they will save families a significant amount in local taxes. The study notes, though, that similar transitions to EPR in British Columbia and Ontario have not provided any evidence of a reduction in municipal taxes for households.

Under LD 1541, the Maine Department of Environmental Protection would set the packaging fee schedule on producers, based on the per-ton costs derived from collecting and processing a given producer’s packaging material.

Advocates of the legislation claim similar laws have existed in countries in Europe and Asia with no significant impact on consumer prices. The author makes sure to confront this argument by pointing out that a lack of evidence does not prove an outcome.

Further, there has not been a significant amount of research or studies conducted on this specific topic. He notes that it is very difficult to isolate the impacts of EPR legislation on costs after it has already been passed. Nevertheless, he calls for more investigative work and research to be done on this topic to form more concrete conclusions.

LD 1541 primarily aims to shift the costs of recycling to producers, and thus consumers, lacking any legitimate aim to improve recycling programs. If approved by lawmakers, don’t be surprised when your groceries are more expensive.

About Nick Linder

Nicholas Linder, of Cincinnati, is a communications Intern for Maine Policy Institute. He is going into his second year of studying finance and public policy analysis at The Ohio State University. On campus, he is involved with Students Consulting for Nonprofit Organizations and Business for Good.

Recommended for you

Comments