Monday, July 28, 2008

Bad Bags

From the Rose City a proposal by the Mayor Elect (does one capitalize an informal title?) to implement a fee for anyone wishing to have their purchases at a grocery store placed in a plastic or paper bag.  Seattle too.  So what does economics have to say about this?  Well, it depends.  

But before I get to that, some preliminary details that are not at all clear this this observer:

Exactly what category of store does this apply?  And, why not all if there is some distinction?

Why the same fee for both paper and plastic bags?

To whom do these fees accrue?

What is the estimate of the cost of the bags to society?

These details are pretty important because if you are to make an economic argument for such a fee, it would be along the lines of Pigouvian taxes.  Which is to  say that if an economic activity yields a cost on others not directly involved in the transaction, taxing that activity the amount of this external cost will create an efficient market outcome.  So I would like to know to start, what is the cost of these bags to society?  Yes their manufacture is expensive, but that cost is born by the stores.  So I imagine that it is a combination of the carbon emissions from the manufacturing process, the cost of improperly disposed of bags on the municipality and, what else, the cost of the pollution in terms of despoiling habitat?  I don't really know all of the bad things that bags are supposed to have done to society so feel free to fill me in.  If these are serious and the fee is commensurate with these costs, then as an economist I have no problem with an appropriate tax.  

But as an aside, I often reuse my bags (I have a dog - I need say no more) and extras I bring back to the store to recycle - does this really help, or does the energy that is used in the recycling process mostly wipe out the gains?

However, this fee is not being talked about in these terms, but more in terms of "how much would it take to really get people to opt out of getting bags with their purchase?"  Which, as an economist with a bit of a libertarian streak, I find irritating.  Government has no business deciding how we should behave above an beyond these social costs.  Also, as I mentioned above, there should be no distinction between grocery stores and any other store if we are being honest and consistent.  A bag is a bag - let the patrons of all stores pay the true social cost!  (Let me venture to guess that more patrons of Victoria's Secret than of the Disney Store would opt to pay for the bag - but that is another economics lecture).  

So I think this talk of twenty cents is absurd.  This seems much too high for the Pigouvian tax - but I am ready to be shown otherwise.  Also, if we are serious about the 'right' tax, then paper and plastic should be different costs presumably.  So this really is about behavior not true social costs and, as such, a dangerous and very tricky path to tread for a mayor - social engineering.  There are lots of things we wish people would do - be nice to each other for example - but are we going to start charging for rudeness?   

Let me be absolutely clear.  These bags may be a serious problem (though I think we are really talking about the plastic ones not paper - though paper has its own issues) and as such, may be an entirely appropriate case for a fee, but before suggesting a random fee, be serious in thinking about the external costs and sell the fee as good economics.  I think it would be great if everyone used reusable bags, rode bikes everywhere and such, but there are many, many things that are in some way bad for us and the environment (e.g. beer) that once you start with the logic that government should start telling us what we should do, it is hard to stop.  This is really my point about must policy, there should be good economics behind it, not just good intentions.

A final side note, the accrual of these fees would presumably go to the municipality to offset the extra cost they impose, otherwise it would seem a bit pointless but so far I have failed to notice how this tax would be implemented.


jessibeaucoup said...

I use reuseable bags and its not a big deal. I support the fee because I think it would help those who are too lazy or still denying climate change to do the right thing. As far as dog and cat waste, I also spend the extra cash for biobags. I use biobags for my regular trash too - which is down to about one can a month because I am very aware of how things are packaged and minimizing plastic packaging coming into my home. I also compost and recycle, of course. All the little things do add up and they do make a difference. I, like you, am unsure of how the economics of the proposed bag tax work but that's not why I'm supporting it - I'm supporting it because I think it is the right thing for the environment.

Chris Lowe said...

Pigouvian -- great word -- French economist Pigou?

Both paper and plastic bags have problems in the manufacturing processes, of different sorts. Paper draws on a renewable base resource & is more recyclable into more paper, but uses energy to produce and creates air and water pollution. It is biodegradable though lots of paper bags end up being preserved in landfills inside plastic bags. (I once saw a PBS show in which an anthropologist who analyzes garbage in landfills made a funny comment on how strange people in 500 years may find it that we went to so much trouble to preserve our garbage by sequestering it in plastic).

Plastic uses petroleum, so it is not just the emissions in production but where such bags fit in the whole calculus of opportunity costs of various uses of petroleum. Should we be more concerned that plastic bags take petroleum from energy uses, or that burning the stuff wastes a resource that would be better saved for desirable uses of plastics? My understanding, which may be wrong, is that plastic bag "recycling" is sort of like tire recycling -- it goes crude, low grade uses in things like the material used in the most recent iteration of a playground across the street to make soft landing pads at the bottom of a slide. With some kinds of plastics there can also be problems of off-gassing or leaching toxins that get into the atmosphere, groundwater or soil (though this is a bigger issue with hardish plastics used to hold stuff we drink).

In principle plastic bags are more re-usable multiple times but I think paper bags may actually get reused as bags more often. Recently I've been trying to use plastic shopping bags as garbage bags rather than buying the latter.

But I think from a municipal (or Metro) point of view the biggest cost of plastic bags actually is in landfills. I am not sure if this cost would be enough to justify some sort of subsidy or distribution of reusable bags similar to the distribution of recycling and yard debris bins.

An aspect which bothers me is that particularly at 20¢ the cost per shopping trip for a family with several children for low income families could become a genuine burden, while many of the current reusable bags, bought in multiples would be pretty pricey for such families. If there were a system such that the charge for the current type bags was reflected in a coupon or was punched or entered into a card, such that when it reached a certain level you could exchange whatever the marker was for a reusable, I'd be slightly happier about it. Logistics could be hard.

Your point about bags from other stores than grocery stores is a good one.

Christian said...

Beer is bad for the environment?

Fred Thompson said...

Nevertheless, there are some issues that aren't salient enough to rely on Pigouvian incentives (English actually). They would have to be too high to influence behavior significantly. If disposable bags are a serious problem, mandate reuseable bags. Otherwise, if this is just good intentions as jessibeaucoup implies, tant pis pour lui.