Eco-fees: We’re missing the point

HiResOne of the goals of extended producer responsibility (EPR) is to provide funding, on the front end, for the disposal and recycling of products that are potentially harmful to the waste stream or may simply be a burden to handle.  Those fees, commonly known as “eco-fees”, may then be passed down to the purchaser either by being embedded in the product’s price or as a separate visible line item at the time of a product’s purchase. The “how tos” associated with implementing these “eco-fees”, has a direct effect on retailers. How are these fees applied and collected? What does this mean for retailers?  What are the issues to consider?

Retailers are on the front lines of extended producer responsibility (EPR): When a product reaches the end of its life, who is responsible for disposal or recycling, who pays, and how are those transactions seen?  Since many consumers take their used products back to retailers, they are often at the center of any issues of EPR.

Municipalities, which typically bear the brunt of disposal and recycling costs, are the strongest advocates of EPR programs because the monies collected help to subsidize their budgets. Retailers, who often are responsible for collecting “eco-fees” charged to consumers for disposal or recycling, are often less enthusiastic. Manufacturers often support visible fees because it shifts the responsibility for higher prices from them to the government that is requiring this “tax”.  Consumers, who ultimately pay for EPR programs, whether an eco-fee is visible or built into the price of a product, rarely welcome an additional fee attached to their product purchase.  When it’s visible, the reaction is more evident, as was seen in Ontario in early July 2010, when an array of products became part of the Province’s product stewardship regimen.

Retailers argue that if an eco-fee is explicit and visible, even though the retailer has no choice (as with sales tax), they will be blamed for the fee. Retailers will also be responsible for collecting, reporting and forwarding fees, adding operational costs.  A less visible fee, they say, will cause much less consumer backlash. Conversely, though, an invisible fee may still lead to consumer criticism because the overall price of the product will likely still go up.

By focusing on the visibility of fees, policymakers are missing the two strongest benefits of eco-fees: influencing consumer behavior and encouraging greener products.

Current programs charge the same fee, say, $25 for a TV up to a certain size, across the board, regardless of the environmental attributes of the product. All this practice does is explicitly shift the cost of disposal/recycling from municipalities to the consumer. It does not influence the consumer to choose the more environmentally preferable product. Eco-fees based on product design and the ease or difficulty of recycling can benefit all parties.

For example, if eco-fees were lowered for products made of more recycled materials, or products that are easier to recycle, consumer purchases would influence manufacturers to produce more ecologically responsible products.

The debate over whether eco-fees are visible or not diverts attention from the most important issue: using fair, judiciously applied fees to serve as a catalyst for offering more environmentally-friendly products and more aware consumers. As part of a comprehensive product stewardship strategy, eco-fees can be a valuable tool to help increase responsible recycling.

The key for any consumer in all of this is how much do they want to know about the components of pricing and what might they do with this knowledge?  At the end of the day, who bears the blame for encumbering consumers with higher prices?  All of the stakeholders – including retailers, government and manufacturers — want it to be someone else and not them.  Visible fees simply force this discussion out into the open.

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