Evaluation of Economic Aspects of the Deposit-Refund System for Packaging in Latvia

Purpose – The aim of the paper is to estimate the costs of implementation of the deposit-refund system for packaging of beverage drinks in Latvia, and to evaluate the economic feasibility of the system in the period up to 2020. Design/methodology/approach – The economic assessment is based on the projections of the future consumption of beverage drinks, and of the amount of deposit packaging respectively. Investment, collection, transportation, maintenance and other system operating costs are considered. An evaluation is made to compare the producers’ costs in the existing curbside collection system and in deposit-refund system. Findings – The costs of the deposit-refund system depend on the amount of packaging placed on the market. The amount of deposit packaging, in its turn, depends on the consumption of beverage drinks affected by GDP. The implementation of the deposit-refund system would cause an increase in the beverage drink packaging costs, as producers would need to pay the service charge to cover the costs of the system operator. The assumed return rates of deposit packaging exceed the existing recovery rates. Thus, compared to the curbside collection system the recovery of PET, glass and aluminum has increased, whereas the amount of landfilled waste – decreased. Originality/value – For several years there have been on-going discussions on implementation of the packaging deposit-refund system in Latvia. However, there are no academic studies available, applicable to evaluate the economic aspects of the system implementation. The paper presents the methodology for assessing the investment, collection, maintenance and other costs, as well as provides the results of estimated costs of the packaging deposit-refund system in Latvia in the period up to 2020