Cash Recycling as an Efficiency Enhancing Anti-Poverty Program

While there are many descriptive articles about cash recyclers this is the first empirical study of people recycling for cash. A new survey shows that cash recycling is an important part of the income of the working poor and that an astonishing twenty percent of the income of professional scavengers comes from recycling. At the same time professional and workplace recyclers are responsible for a large amount of new recycling. A rough estimate of the amount of new recycling generated by the recycling redemption centers in Santa Barbara, CA lies between 36% and 51% of all cash recycling. Based on the evidence presented here it is important for policy makers to consider structuring new bottle laws in ways that encourage professional recycling.recycling, deposit-refund, Pigouvian tax

The Effect of Income on Recycling Behavior in the Presence of a Bottle Law: New Empirical Results

Eleven U.S. states have enacted “bottle laws” and they are one of the few examples of a policy that takes advantage of the price system to ameliorate environmental damage. A deposit-refund program on beverage containers is a consumption tax combined with a disposal rebate that is the equivalent of a Pigouvian tax. Using individual level data I have collected on observed cash recycling behavior, this paper shows that an unintended consequence of bottle laws is that they have the potential to increase the incomes of very low wage workers. If states set the bottle deposit high enough, harvesting recyclables becomes viable employment. The use of a price system as an environmental remedy is often criticized on the grounds that it leads to lower incomes for the poor. In this case deposit-refund recycling laws may provide a way to improve resource allocation using the appropriate Pigouvian tax, and simultaneously provide a way to increase the income of low wage workers. The first section of this paper I estimate the determinants of recycling behavior in the presence of a bottle law. This provides some insights into the characteristics of those who cash recycle. In particular I find that low income households are much more likely to recycle for cash than are high income households. The second section of this paper uses the dataset of recyclers to examine the importance of recycling income to low income households. The data show the surprising result that recycling income does indeed provide a substantial supplemental income to a certain group of low-income cash recyclers.

Cash Recycling, Waste Disposal Costs, and the Incomes of the Working Poor: Evidence from California

This paper finds that bottle laws reduce the costs of waste streams by diverting new material into recycling programs, in addition to increasing the income of the working poor. New survey data from California indicate that between 36% and 51% of the material generated by the redemption centers in Santa Barbara, California, would not have been captured by existing curbside recycling programs. California’s bottle law has an unusual structure, with redemption centers that pay by counting containers or by weighing the material recycled. The evidence suggests policy makers should consider structuring new bottle laws to encourage broader recycling.