Question

MARKET FAILURE – packaging in the UK:

Consider the external effects of soft-drink packaging on UK beaches, according to this article:

"

Coca-Cola bottles and cans are the most commonly found items of packaging pollution on British beaches, making up nearly 12% of all litter, research by Surfers Against Sewage (SAS)has found.

The results came from a series of 229 beach cleans organised by the anti-pollution campaigning group in April, which found close to 50,000 pieces of waste. About 20,000 of these carried identifiable brands, of which Coca-Cola was the leader, followed by Walkers crisps, Cadbury’s, McDonald’s and Nestlé.

When other brands owned by Coca-Cola were taken into account, the company’s share of the waste found rose to more than 15%. PepsiCo was the parent company to more than 10% of the branded waste found, followed by Cadbury’s owner, Mondelēz International, with about 7%. Identifiable packaging from McDonald’s accounted for 6% of the total with Nestlé just behind at 5.5%.

Hugo Tagholm, chief executive of SAS, said businesses must take responsibility for the waste associated with their products, citing new rules intended to force companies to prevent and remedy littering. “Producers must offer full transparency and disclosure on the amount and type of packaging they use. Our environment is in peril and plastic pollution is a clear indicator that business as usual just won’t do,” he said. “This is not a littering issue – business needs to provide radical and responsible new systems that drastically reduce their impact on our oceans, forests and nature at large.”

More than 45,000 volunteers took place in the Big Spring Beach Clean series of events in April that resulted in the biggest ever survey of beach litter in the UK, analysed by the consultancy Eunomia. The findings have been submitted to the government, which is considering ways to reduce the UK’s littering and packaging pollution problems through the Extended Producer Responsibility regulations.

Sign up to the Green Light email to get the planet's most important stories

Read more

At present, companies must be accountable for their packaging if they have an annual turnover of more than £2m and handle more than 50 tonnes of packaging a year. However, SAS complains that in practice the vast majority of the cost of dealing with litter and packaging waste – about 90% – is borne by local authorities and that the parent companies of many leading brands do not share information on the quantity of packaging they produce.

Following the consultation, the government may toughen the rules, making companies 100% responsible for the cost of the waste resulting from their packaging, from production to final disposal. SAS is calling for more transparency to make any new rules effective.

The survey found that 10 companies were responsible for more than half of the identifiably branded rubbish found on the UK’s beaches. Tagholm said: “People and planet need these companies to change how they do business. At the moment, the cost of this waste is left in the hands of local councils, taxpayers and the environment.”

Advertisement

A Coca-Cola spokesperson said: “We don’t want to see any of our packaging end up as litter, on land or in the ocean. We are one of the few companies to publish the amount of packaging we use, globally and locally, and we are supportive of reform to the Extended Producer Responsibility [rules], including the introduction of a deposit return scheme to help us get more packaging back.”

The company, which produces 3m tonnes of plastic packaging a year, has pledged to collect and recycle one bottle or can for every one that it sells, as part of a global initiative called WorldWithoutWaste, and last year said it would increase the amount of recycled plastic in all bottles across its brands from 25% to 50% by 2020. “In Britain, all our bottles and cans are already 100% recyclable and our goal is to use the power of our brand to drive people to recycle more, and calling for reform of the UK producer responsibility system,” the spokesperson said.

“When disposed of properly, our bottles can be recycled into new bottles over and over again. The current consultations on packaging and recycling represent a once-in-a-generation opportunity to reform the system to ensure more packaging is recovered and recycled and we welcome these.”

We've got an announcement …

… on our progress as an organisation. In service of the escalating climate emergency, we have made an important decision – to renounce fossil fuel advertising, becoming the first major global news organisation to institute an outright ban on taking money from companies that extract fossil fuels.

In October we outlined our pledge: that the Guardian will give global heating, wildlife extinction and pollution the urgent attention and prominence they demand. This resonated with so many readers around the world. We promise to update you on the steps we take to hold ourselves accountable at this defining point in our lifetimes. With climate misinformation rife, and never more dangerous than now, the Guardian's accurate, authoritative reporting is vital – and we will not stay quiet.

We chose a different approach: to keep Guardian journalism open for all. We don't have a paywall because we believe everyone deserves access to factual information, regardless of where they live or what they can afford to pay.

Our editorial independence means we are free to investigate and challenge inaction by those in power. We will inform our readers about threats to the environment based on scientific facts, not driven by commercial or political interests. And we have made several important changes to our style guide to ensure the language we use accurately reflects the environmental emergency.

The Guardian believes that the problems we face on the climate crisis are systemic and that fundamental societal change is needed. We will keep reporting on the efforts of individuals and communities around the world who are fearlessly taking a stand for future generations and the preservation of human life on earth. We want their stories to inspire hope."

Based on this discussion and economic theory, draw an appropriate diagram to illustrate and explain this specific type of externality (assume the market is competitive). Demonstrate on your diagram and evaluate what would be a suitable government policy to help solve the market failure in this case. [Type answer in 500 words or less]

Answer 1