DEPOSIT-REFUND SYSTEMS: ECONOMIC INCENTIVES FOR THE REDUCTION AND PROPER DISPOSAL OF HAZARDOUS WASTES

Hazardous wastes such as spent solvents and heavy-metal paint waste are characterized by certain adverse properties which include toxicity, reactivity, corrosivity, and flammability. Improper disposal of hazardous wastes may lead to air pollution, water pollution, or soil contamination which are dangerous for human health and for the ecosystem. These effects are known as externalities if the consequences, or costs, are not considered in the waste-generators' decisions. Due to externality, the social costs, including externality costs, and private costs diverge. Since the Love Canal event, hazardous waste disposal (HWD) has drawn national attention. A Roper poll reported that hazardous waste was perceived by the American public as the most important environmental problem (EPA, 1987; cited by Hammitt, 1988). This concern has led to a number of statutes and regulations to control HWD. This paper will examine the potential role of the deposit-refund (DR) systems as a possible strategy to control hazardous waster disposal.