The Role of Economics in Extended Producer Responsibility: Making Policy Choices and Setting Policy Goals

Extended producer responsibility (EPR) embodies the notion that producers should be made physically or financially responsible for the environmental impacts their products have at the end of product life. The EPR concept has taken hold in Europe and is garnering wide interest in the United States, where a variant known as “shared product responsibility” or “product stewardship” is usually the preferred approach. There are several policy instruments that are consistent with EPR—product takeback mandates, advance disposal fees, deposit-refunds, recycled content standards, and more. The EPR concept itself, however, provides little guidance about which of these instruments might be appropriate under particular conditions and for particular products. Moreover, while the EPR goal is usually focused on end-of-life environmental impacts, in the United States, at least, the goal seems to have widened to include environmental impacts throughout the product life-cycle. And even a focus on end-of-life impacts leaves the question of whether EPR is intended to deal with waste volumes, the toxic constituents of waste, the method of waste disposal, or a combination of these things. In this paper, I address three main topics: appropriate goals for EPR; conditions under which EPR should be preferred over alternative non-EPR policy instruments; and specific policy instruments that are both cost-effective and consistent with EPR principles. In the discussion of the second and third topics, I focus on the issue of “design for environment.” I develop four policy “maxims” that should guide EPR policymaking. I then apply those maxims to a brief case study of electronic and electrical equipment waste.