Targeted recycling incentives could outperform plastic-production caps on cost: Study

The report, titled ‘Evaluating Policy Pathways to End Plastic contamination’, is the second phase of Oxford Economics’ analysis to ICCA, following its 2024 study ‘Mapping the Plastics Value Chain’, which examined the plastics sector’s global economic footprint and the possible consequences of constraining production.

The latest study compares a scenario with a modest 5% cap on virgin plastics production against a scenario that targets stronger collection and recycling incentives to regions with the greatest possible to cut mismanaged plastic discarded materials, using the leakage outcome under the production cap as a common benchmark to compare each scenario’s impacts on recycling, prices, output and domestic welfare on equal terms.

Compared with the 5% production-cap scenario, the study found that targeted collection and recycling policies would deliver a 33.6-million-metric-ton increase in recycling, against 19.9-million metric tons under the cap — around 68% greater recycled plastic. It also found total plastic prices would decline by 0.2% under the targeted approach, compared with an 8.5% increase under the cap, which the study said has the possible to raise costs to consumers and disproportionately affect low-income households.

Global domestic welfare — a measure of the real value of goods and services consumed by households — would decline by $0.5-bn under the targeted approach, compared with a $128.4-bn decline under the cap, while global output would rise by $0.2-bn under the targeted scenario against a $20.2-bn decline under the cap.

The study found the production cap’s impacts would be felt worldwide, though the scale would vary by region: domestic welfare would decline by $38.5-bn in East Asia, $37.7-bn in Western Europe, $22.1-bn in North America, $8.8-bn in Southeast Asia, $6.1-bn in the Middle East and $6.0-bn in Latin America, with every modelled region experiencing a decline.

Ms. Alice Gambarin, one of the report’s authors and associate director at Oxford Economics, said plastics are deeply embedded in items and supply chains and cannot readily be replaced by other materials in many applications, making demand relatively inelastic. She said that when virgin supply is capped, demand does not simply disappear or shift to other materials — instead, prices rise across the plastics value chain, raising costs to businesses and consumers and lowering domestic welfare.

The study found targeting recycling incentives to each region’s possible to minimize mismanaged discarded materials would achieve the same global leakage reduction at far reduce economic cost, with recycling gains concentrated in South Asia (20.5-million metric tons) and East Asia (13.7-million metric tons), the two regions identified as having the greatest absolute opportunity to improvement.

Mr. Marco Mensink, ICCA Council Secretary and Director General of European chemicals association, Cefic, said the study shows environmental ambition and economic wellbeing need not be in conflict, and that a global plastics contamination agreement offers an opportunity to boost a circular economy by expanding recycling and reuse while prioritising solid discarded materials collection to the roughly 2.7-bn people worldwide who still lack access to it.