Theory and Impact
Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Soocheol Lee, Kazuhiro Ueta, Janet E. Milne and Hope Ashiabor
Chapter 11: Decision making for market-based environmental cost allocation: the case of packaging waste policy in Germany
Numerous environmental problems have emerged and worsened during the last half-century, leading to the ever-increasing costs of addressing the consequences. The dilemma facing society today is how to cope with and allocate responsibility for the associated rising environmental costs within a framework acceptable to the involved parties and society. One illustration of a critical environmental issue is that of the increasing volume of packaging waste produced by our consumer society, and the question is how to allocate the cost burden of collecting, sorting, and recycling the refuse, a task that has heretofore been the jurisdiction of local governments. As a means of addressing this problem, countries have explored the use of regulatory mechanisms as well as economic solutions. Among these pioneering nations, Germany is well known for the Duales System Deutschland (DSD) system – new and highly innovative model for allocation of environmental costs. Established in 1990 by manufacturers and industries related to packaging manufacturing and distribution, the DSD system is designed to collect, sort, and recycle packaging waste. It was devised by the business sector to deflect the intent of the soon-to-be enacted Packaging Ordinance (1991) that would have placed the major responsibility on manufacturers and distributors for the collection, sorting, and recycling of post-consumer packaging waste. The DSD system and Packaging Ordinance demonstrate the world’s first practical example of the new environmental principle of Extended Producer Responsibility (EPR) (OECD 2004, p. 120).
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