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Direct Impact Study Shows At Least $800 Million Cost to Proposed Extended Producer Responsibility Act
ALBANY – Canadian based York University recently conducted a study on the impact of the proposed Extended Producer Responsibility Act (EPR) and concluded the bill would result in $800 million in direct costs for the industry, with the potential of an additional $2 to $3 billion impact on the New York State economy. The study reveals the proposed legislation would have a disproportionate effect on low-income households (less than $40,000) due to their proportionally higher purchase of prepackaged products.
The report, "Modeling Impact on Consumer Packaged Goods Pricing Resulting from the Adoption of Extended Producer Responsibility in New York State," was conducted by Dr. Calvin Lakhan, co-investigator of the Waste Wiki project at York University, a research effort focused on Canada's waste management practices and policy. Dr. Lakhan has previously concluded extensive research on EPR programs already in place in Canadian provinces.
"Few studies to date have attempted to quantify what the adoption of EPR legislation will ultimately cost producers, and how, if at all, the price of consumer-packaged goods changes in response to producer responsibility," the report said. "Using best available data, this study combines both New York State, as well as data from Canadian jurisdictions to model both the direct, indirect, and induced effects of EPR legislation on the New York State economy," the report stated.
Notably, the report makes no specific recommendation in support or opposition to New York's EPR legislation. However, key findings include:
- Based on estimated quantities of printed paper and packaging generated/diverted in New York State, the direct impacts of EPR legislation are estimated to be $803.2 million annually. This figure includes costs associated with administrative expenses, promotion and education, and ongoing data expenses. Still, it does not have any additional investments in recycling infrastructure required or baseline data collection.
- Based on the modeling of indirect and induced effects attributable to EPR legislation, we arrive at a final impact multiplier that ranges from 3.6x to 5.4x. The multiplier is intended to capture both the direct, indirect, and induced impacts of adopting EPR legislation in New York State. Using these multipliers, an $803.2 million-dollar direct cost to producers (resulting from EPR legislation) results in a $2.9 billion to $4.17 billion impact on the economy of New York State.
- The total impact on "basket of good" pricing (packaged goods) ranges from 4.01% on the low end to 6.35% on the high end. Stated alternatively, this translates into an additional $36 to $57 per month in grocery costs for the average family of four in New York State.
- While advocates of EPR say that producers should be paying these costs irrespective of what they might be, the reality is that these costs are passed along to and absorbed by the consumer, in the form of increases in the price of consumer-packaged goods.
- While a 4-6.5% increase in our grocery bills may seem like an inconvenience to some, it can have catastrophic consequences to lower-income and marginalized families in New York State. . . households characterized as "low income" (household income less than $40,000 per year) consume almost 20% more prepackaged goods (namely grains, produce and frozen meats) when compared to families whose household income exceed $100,000 a year. There is an inverse, statistically significant correlation between household income and the percentage of prepackaged products of overall weekly purchases. Given that lower-income groups are the most significant consumers of packaged goods (both in absolute terms and as a relative percentage of the overall purchasing basket), any upwards pressure in the cost of foodstuff could have potentially adverse impacts. Ultimately, the decision to adopt producer responsibility legislation for packaging waste has an unintended effect that disproportionately affects are most vulnerable and marginalized families.
"We are sharing this report, which has already been publicly released, with members of the New York State legislature, because its assessment of the potential costs of EPR programs need to be considered before acting on any major recycling legislation," said Ken Pokalsky, Vice President of The Business Council of New York State, Inc. "This bill has received national attention, and we have been working with consumer product, packaging, and paper producers from New York and across the United States in evaluating S.1185-B and its impact. This report is an incredibly valuable addition to that assessment effort."
"We are also providing the legislature with background on New York's existing solid waste management programs. The state should invest more in source separation and recycling infrastructure, and in promoting markets for recovered material. Industry fees can be part of a comprehensive approach, but New York can achieve significant improvements without the major disruption, uncertainty and cost of a broad EPR mandate.”
The Business Council has been very active on this proposed legislation. Please find more information, including our opposition memo.