A deposit-refund system (DRS), also known as deposit-return system, advance deposit fee or deposit-return scheme, is a surcharge on a product when purchased and a rebate when it is returned. A well-known example is when

container deposit legislation Container-deposit legislation (also known as a container-deposit scheme, deposit-refund system or scheme, deposit-return system, or bottle bill) is any law that requires the collection of a monetary deposit on beverage containers (refillable or ...

mandates that a refund is given when

reusable packaging Reusable packaging is manufactured of durable materials and is specifically designed for multiple trips and extended life. A ''reusable package'' or container is “designed for reuse without impairment of its protective function.” The term ret ...

is returned. Deposit-refund system are a market-based instrument to address

externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...

. A DRS is similar to a

pigovian tax A Pigouvian tax (also spelled Pigovian tax) is a tax on any market activity that generates negative externalities (i.e., external costs incurred by the producer that are not included in the market price). The tax is normally set by the government ...

, with the key difference that a DRS system refunds the fee after the product is returned. This provides an incentive to consumers to properly dispose a product. While most commonly used with beverage containers it can be used on other materials including liquid and gaseous wastes. Deposit-refund systems are used on products such as batteries, tyres, automotive oil,

consumer electronics Consumer electronics or home electronics are electronic (analog or digital) equipment intended for everyday use, typically in private homes. Consumer electronics include devices used for entertainment, communications and recreation. Usually r ...

and shipping

pallet A pallet (also called a skid) is a flat transport structure, which supports goods in a stable fashion while being lifted by a forklift, a pallet jack, a front loader, a jacking device, or an erect crane. A pallet is the structural foundat ...

s. 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. DRS is said to be based on the principles of

Extended Producer Responsibility In the field of waste management, extended producer responsibility (EPR) is a strategy to add all of the environmental costs associated with a product throughout the product life cycle to the market price of that product. Extended producer respo ...

. Deposit-refund systems can be either voluntary or mandated by legislation.

References

{{Reflist Economy and the environment Recycling Container deposit legislation

See also

References