(1) businesses bag items
(2) customers discard bags
(3) bags end up in the Anacostia River
D.C.'s solution: tax each bag 5 cents.
I ran across an article from the San Francisco Chronicle from 2005 talking about a 17-cent bag fee that was under consideration at the time:
Under the grocery bag proposal, there would be no refunds for shoppers who return bags and thus no motivation for people to paw through trash bins plucking bags out of the waste stream.But why can't there be such an incentive? There are two phases of the bag pollution process: customers getting the bags and afterward disposing of them improperly. Why can't we subsidize solutions to the latter (namely, through recycling) instead of taxing the former?
"There is no incentive on the back end," says Margaret Walls, a resident scholar and economist at Resources for the Future, a nonprofit think tank in Washington.
Recycling of plastic bags, it turns out, is inefficient and far too expensive. According to one source, recycling a ton of plastic bags costs about $4,000, while manufacturing the same amount from scratch costs about $30.
In addition, to motivate any substantial amount of recycling of plastic bags, customers would have to receive a decent sum in return. The cost of a new bag to a grocery store is less than 1 cent, but it would take much more than that to get people to recycle. If we factor in the subsidies necessary to get people to recycle, the cost is far more than $4,000 a ton. So perhaps D.C. is right in trying to address the bag collection step instead of the bag disposal step.
Besides, one could argue that small monetary rewards have already been proven not to work. For years, grocery stores (at least in California) have knocked a few cents off your bill if you brought reusable bags, yet the vast majority of customers choose not to. Interestly, this is essentially the same as a bag tax, but the only difference is the framing or anchoring. A 5-cent subsidy for bringing your own bag is analogous to a 5-cent tax for not bringing your own bags, yet the compliance rate under the former is drastically lower than it is under the latter. Traditional economics is not very good at explaining this inconsistency, and it must defer to psychology or behavioral economics and discussions about risk aversion, or how a small loss brings out much more of an emotional response than does the equivalent small gain.
I've written a few other things about the D.C. bag fee, which you can read under my Environment and Recycling label.