Deposit-refund system

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A Schematic Representation of Deposit Return Scheme in Scandinavian Countries
A container deposit refund facility in Melbourne Australia

A deposit-refund system (DRS), also known as deposit-return system, advance deposit fee or deposit-return scheme, are systems that add a surcharge on a product when purchased and a rebate when its packaging is returned. A well-known example is when container deposit legislation mandates that a refund is given when reusable packaging is returned. A DRS is a market-based instrument to address externalities, similar to a pigovian tax, with the key difference that a DRS refunds the fee after the product is returned.[1] This provides an incentive to consumers to properly dispose of a product.

While most commonly used with beverage containers, DRS can be used on other materials including liquid and gaseous wastes.[2] A DRS is used on products such as batteries, tyres, automotive oil, consumer electronics and shipping pallets.

There are three potential advantages of a DRS: it reduces illegal dumping by giving a financial incentive, it makes monitoring and enforcement easier, and evading the costs is difficult.[1]

A potential disadvantage is, that DRS can focus on the collection of single-use beverage packaging and replace systems for multi-use packaging return systems (for example in Germany)[3].

DRS is said to be based on the principles of Extended Producer Responsibility.[4]

DRS can be either voluntary or mandated by legislation.

See also

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Further reading

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  • Butler, Graham (2025). "Deposit return schemes of EU Member States and the EU's internal market". Review of European, Comparative & International Environmental Law. 34. doi:10.1111/reel.12591.

References

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  1. ^ a b Walls, Margaret (November 2011). "Deposit-Refund Systems in Practice and Theory" (PDF). RFF DP 11-47. Resources for the Future. Archived from the original (PDF) on 1 August 2014. Retrieved 22 August 2012.
  2. ^ Fullerton, Don; Wolverton, Ann (2000). "Two Generalizations of a Deposit-Refund System" (PDF). American Economic Review. 90 (2): 238–242. doi:10.1257/aer.90.2.238.
  3. ^ Rhein, Sebastian; Sträter, Katharina Friederike (2021-12-16). "Intended and unintended effects of statutory deposit return schemes for single-use plastic bottles: Lessons learned from the German experience". GAIA - Ecological Perspectives for Science and Society. 30 (4): 250–256. doi:10.14512/gaia.30.4.8. ISSN 0940-5550. Archived from the original on 2023-03-14.
  4. ^ Gupt, Yamini; Sahay, Samraj (2015-06-01). "Managing Used Lead Acid Batteries in India: Evaluation of EPR-DRS Approaches". Journal of Health and Pollution. 5 (8): 52–63. doi:10.5696/i2156-9614-5-8.52. ISSN 2156-9614. PMC 6221476.