Valuable e-waste: Implications for extended producer responsibility

Extended Producer Responsibility (EPR)-based product take-back regulation holds OEMs (Original Equipment Manufacturers) of electronics responsible for the collection and recovery (e.g., recycling) of electronic waste (e-waste). This is because of the assumption that recycling these products has a net cost, and unless regulated they end up in landfills and harm the environment. However, in the last decade, advances in product design and recycling technologies have allowed for profitable recycling. This change challenges the basic assumption behind such regulation and creates a competitive marketplace for e-waste. That is, OEMs subject to EPR have to compete with Independent Recyclers (IRs) in collecting and recycling e-waste. Then a natural question is whether EPR achieves its intended goal of increased landfill diversion amid such competition and what its welfare implications are, where welfare is the sum of OEM and IR profits, environmental benefit, and waste-holder surplus. Using an economic model, we find that EPR that focuses on producer responsibility alone may reduce the total landfill diversion and welfare amid competition. A possible remedy in the form of counting IRs collection towards OEM obligations guarantees higher landfill diversion. However, EPR may continue to reduce the total welfare, particularly when OEM recycling replaces more cost-effective IR activity.