In economics, “negative environmental externalities” occur when someone is responsible for something negative (e.g. a farmer using toxic chemicals that spread into the environment) and does not pay the injured party the price of the damage/cost incurred. The lack of compensation for negative externalities is at the root of all the issues in our contemporary economy and of the inability to include in the price of a product, be it an object, a service or a source of energy, the cost of the negative impacts of its production, at least in the last century or so.

For example, given the ever-increasing damage of climate change, the cost of the related damage per unit of CO2 should be included in the price of petrol, electricity produced from natural gas, and red meat. A small levy could be enough to support decarbonisation projects, finance reforestation plans and implement climate adaptation programmes.

This system is called “Pigouvian tax” (from Arthur Cecil Pigou, the economist who devised it) and it’s based on the fundamental principle of “polluters pay”. In the field of environmental law, compensatory protection has two interrelated purposes: a compensatory one, where economic compensation is guaranteed to the injured party proportional to the damage caused by the polluting activity; and a deterrent one, discouraging the subject from any action that risks causing environmental damage.

Extended producer responsibility

Yet, this principle is poorly applied to climate-changing emissions (where ETS schemes are a mere stopgap measure); non-existent for many chemical pollutants (e.g. herbicides and fertilisers); and completely unexplored for damage to biodiversity in farming and livestock breeding, mining, fishing, and water contamination.

There is only one major exception: extended producer responsibility (EPR), for when the product turns to waste. Today, there are excellent mechanisms, or collective systems, to make those who produce, import or introduce goods in their territory pay so that, once the products reach their end-of-life, they undergo proper disposal, without polluting soil or water.

An increasingly widespread and effective mechanism, easy to replicate, it can serve as an example in other fields, including the carbon tax or other mechanisms related to the social impact of a good or service. The Pigouvian system requires the ex-ante payment of a compulsory tax, that will be used to create the management and recycling infrastructure for each product.

This issue 46 of Renewable Matter

This issue of Renewable Matter is dedicated to this fundamental principle of the circular economy, not only to understand where EPR is at in several sectors and regions of the world (see the backwardness of the United States vs. Africa’s dynamism), but also to highlight its advantages and shortcomings, to understand where it worked (packaging, lubricating oils, tyres) and where it still has a long way to go (WEEE, vehicles, construction, textiles).

This issue gives a 360° overview of the topic on a global scale, with interviews with leading experts such as Joachim Quoden, general manager of the Extended Producer Responsibility Alliance (EXPRA), and Roberto Coizet, founder and former publisher of Renewable Matter, who has always fought for the implementation of collective systems in every sector. Moreover, the reportage on the Balkans and WEEE will show us the dark side of the trades falling outside the EPR scope.

This is the perfect time to publish an issue on the subject, because of the pressure on the US, the new EPRs on textiles and automotive that will emerge in several European states in the next few years, and the debate on various products, from toys to construction. The UN, together with the World Trade Organisation, should start working on a global treaty for EPR, starting with plastics. Consortia, pressure groups and politicians supporting collective systems should keep this in mind.

Download and read issue #46 of Renewable Matter.

Image: Jean-Pierre Dalbéra, july 2017, Fondazione Cini, Venezia. Subject: Venere degli stracci, 1967, Michelangelo Pistoletto. Courtesy of Cittadellarte - Fondazione Pistoletto, Biella