Environmental taxation of plastic bags and substitutes: Balancing marine pollution and climate change.

Several countries have imposed either a ban or a tax on single-use plastic packaging, motivated by their contribution to marine plastic pollution. This may lead consumers to opt for similar unregulated substitutes, potentially undermining or even counteracting the intended effect of the policy instrument. The purpose of this study is to theoretically and empirically compare the environmental and welfare effects of the first-best Pigouvian taxes on both plastic bags and a substitute (paper bags), with two alternative second-best policy instruments: a tax on plastic products alone, and a common uniform tax on all packaging materials. The empirical analysis accounts for two different types of environmental externalities from the use of both bag types: marine pollution and greenhouse gas emissions. It also compares results for two countries, Denmark and the USA, which differ in the demand for plastic and paper bags. The theoretical analysis shows that a unilateral tax on plastic bags should equal the marginal environmental damage of plastic bags minus a fraction of the marginal environmental cost of paper bags, hence being lower than the Pigouvian tax. The optimal common tax should equal a weighted average of the marginal environmental damage of the two bag types and would be lower than the Pigouvian tax on plastics if the marginal external cost of plastic bags exceeds that for paper bags. The empirical analysis shows that for default parameters, the variation in tax level across the studied scenarios is small. It also shows that if Pigouvian taxes cannot be implemented, a common uniform tax on both bag types would result in a higher welfare gain than a tax on plastic bags alone. Sensitivity analysis reveals that the level of the second-best taxes and their associated environmental and welfare impacts are sensitive to assumptions regarding the littering rate and decay rate of plastic bags in the marine environment.

Insights from international environmental legislation and protocols for the global plastic treaty.

Plastic pollution has emerged as a global challenge necessitating collective efforts to mitigate its adverse environmental consequences. International negotiations are currently underway to establish a global plastic treaty. Emphasizing the need for solution-orientated research, rather than focusing on further defining the problems of widespread environmental occurrence and ecological impacts, this paper extracts insights and draws key patterns that are relevant for these international negotiations. The analysis reveals that (i) environmental rather than human health concerns have been the predominant driving force behind previous regulations targeting pollutants, and (ii) the decision to ban or discontinue the use of harmful pollutants is primarily affected by the availability of viable substitutes. These two key findings are relevant to the discussions of the ongoing Intergovernmental Negotiating Committee (INC) on the global plastic treaty and underscore the recognition of environmental consequences associated with plastic pollution while emphasizing the need to enhance the knowledge base of potential human health risks. Leveraging the availability of substitutes can significantly contribute to the development and implementation of effective strategies aimed at reducing plastic usage and corresponding pollution.