In today’s Finshots, we discuss a new way of dealing with plastic ― the Deposit Refund Scheme (DRS).

The Story

India has a plastic problem. We’re the 5th highest generator of plastic waste in the world. And we recycle only half of this waste each year.

What happens to the rest?

We burn some of it. That releases toxic fumes. Some of it will find its way into water bodies and kill marine life. And then a good chunk of plastic mixes with other kinds of waste and enters poorly maintained dumpsites — of which ~3,000 are peppered across India.

But wait…why are we talking about plastic out of the blue?

To be honest, it’s always a good time to talk about plastic pollution! We do have an ominous warning hanging over our heads at all times — that by 2050, we’ll have more plastic than fish in the oceans. It’s scary and quite depressing!

But the real reason we wanted to talk about plastic is this — Delhi-based Centre for Science and Environment (CSE) just published a report called ‘The Plastic Lifecycle’. They highlighted India’s perennial plastic issue. But they also discussed a novel idea to deal with it. Something called the Deposit Refund Scheme (DRS). And we thought we could look into some more.

But before we get into the nitty-gritty, let’s quickly understand how we combat plastic pollution today.

Bans!!!

That’s right. Our single biggest weapon against plastic pollution involves banning plastics of various kinds. Remember we enforced a ban on single-use plastic in July? You know, the kind that is frequently littered around — like earbuds with plastic sticks, plastic cutlery, straws, wrapping or packing films, candy sticks etc. That did work a bit. Unfortunately, the ban only targeted 2%-3% of the total plastic waste India generates. So it doesn’t move the needle much.

Also, the ban ignores a major pollutant — colas and mineral water sold in single-use plastic bottles. The soft drink industry produces nearly 470 billion plastic bottles annually. And you can imagine how many bottles of water we consume.

Plastic is everywhere. And if the bans aren’t working, we need to find ways to recycle what’s out there.

And maybe we can have mechanisms to shift the responsibility to the folks who actually create and use the plastic?

Like the Extended Producer Responsibility (EPR) policy. Here, polluters are split into three categories — producers, importers and brand owners (PIBOs). And the policy tells these folks, “Hey, you’re creating the plastic waste. You’re the polluter. So it’s your responsibility to pick it up and recycle it.”

Each year, they have to disclose their plastic production. And their EPR targets for recycling.

But most companies aren’t big fans of this policy. Going after and picking up plastic waste can be a painful process. Especially since most of it isn’t segregated properly anyway. And without strict action, only a handful of these importers and brand owners have registered on a centralised portal that would track their plastic collection and recycling targets. No one knows what’s really happening.

So how can we make this better?

Well, that’s where the Deposit Refund Scheme or DRS can come in. It’ll involve common people (like you and me) and you could combine it with the EPR policy.

Basically, when you buy a potentially polluting product — say a bottle of water — you pay a surcharge. Maybe you pay ₹11 instead of ₹10. And when you return the product, you get a refund involving that surcharge.

In a way, it’s like those soft drink bottles you bought back in the day after putting down a refundable deposit. When you returned the bottle, you got the deposit back. That’s exactly what DRS is.

Some countries have tried it and they’ve been quite successful also. For instance, in Norway, 97% of all plastic waste goes back to the vendor. Lithuania’s collection rate increased from 34% to 94% in just two years Even the least successful country, Estonia has a reasonable 83% return rate.

India also has the advantage of a ready base of intermediaries who can help — the 40 million street vendors and 12 million grocery stores in India. They can serve as collection points and make life easier for consumers to drop off plastic bottles.

And this is a way to involve and incentivise everyone in the value chain. You get money when you return plastic. The street vendor gets a cut for their efforts. And the PIBOs meet their targets and maybe get a gold star from the government.

Maybe this can help change India’s low plastic recovery rate of just 50%. And maybe we can emulate Norway.

But before we decide to implement this, maybe we should look at Maharashtra which introduced a DRS in 2018 and called it the Buyback Depository System. The scheme was that Mumbaikars would get ₹0.50 for returning a milk packet, ₹1 for PET bottles that had capacities of 1 litre and above and ₹2 for PET bottles with capacities of 200 ml to 1 litre. Consumers had to put their plastic waste through plastic collection machines to get their incentive and the manufacturers had to recycle them responsibly.

But everyone was puzzled at the time.

Folks pointed out that it cost just ₹0.60 to make one 500 ml plastic bottle. But the scheme wanted to reward consumers with ₹2 for every such bottle. Manufacturers could simply produce these bottles in excess, give them to the government, and walk away with a cool profit of ₹1.4 per bottle.

It was much like the Cobra Effect back in the colonial days. Delhi was suffering through a cobra infestation and the British decided to tackle the problem with a cash incentive. They told folks, “Give us dead cobra skins and we’ll give you money.” But some ingenious Indians realised that they could make a quick buck turning this scheme on its head and started breeding cobras instead. So instead of solving the problem, the incentive actually aggravated it.

And while there isn’t enough data to prove this happened in Maharashtra, the incentive problem was clear as day. But that’s an easy fix with a few tweaks.

There’s actually a bigger issue to contend with. The informal sector. You see, India is home to at least 4 million waste pickers. These folks could earn anywhere between ₹2,000 to ₹10,000 a month to segregate, clean up and supply waste to formal sectors for recycling. So, a direct system involving consumers and PIBOs will eliminate them from the value chain.

Any DRS design will have to keep this in mind.

So yeah, as much as DRS has shown signs of success globally, the Indian scenario could be very different. And unless we figure out ways to iron out some of these kinks, it’s unlikely to make a massive impact on plastic recycling metrics.

Until then…

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