Public Policies for Lead Recycling

Policies that encourage recycling may be used to reduce environmental costs from waste disposal when direct restrictions on disposal are difficult to enforce. Four recycling policies have been advanced: (i) taxes on the use of virgin materials; (ii) deposit/refund programs; (iii) subsidies to recycled material production; and (iv) recycled content standards. This study analyzes the structure of these policies and ranks them in terms of the private costs necessary to achieve a given reduction in disposal. The policies are then examined in the empirical context of the recycling of lead from automobile batteries. Elasticities for primary and secondary lead supply and demand are estimated in order to simulate the effects of lead recycling programs. The results suggest that price-based policy mechanisms can be successful in increasing lead recovery and that the difference in efficiency between the four approaches is substantial. SI would like to thank Howard Chang, Franklin Fisher, Jerry Hausman, Paul Joskow, Robert Stavins, and especially James Poterba for guidance and helpful suggestions. I am grateful to the Center for Energy and Environmental Policy Research at M.I.T. for financial support.