Question

Should recycling fees be collected by retailers when electronic products are sold to consumers, or should it be assessed at end-of-life (when consumers return products for recycling)?
If collected when products are sold, how much would the fee need to be to pay for end-of-life recycling, if you can invest this fee at an interest rate of 5%? If collected at end-of-life, the fee would be the direct cost to recycle.
Assume that consumers keep devices on the following schedule:
Cell phones, tablets, small laptops (screen size: 4”-15”): 2 years, costs $5.00 on average to recycle
Large laptops, desktop monitors, small TVs (screen size: 15”-35”): 3 years, costs $7.00 on average to recycle
TVs (screen size: > 35”): 4 years, costs $10.00 on average to recycle

Answer 1

When recycling fees are to be paid at the end of life, Probability that a consumer will return back the product for recycling (that too on a price?) is less. Consumer who are sensible towards environment may do so, but others may not. If recycling fee is charged at the point of sale only, it is more likely that consumer will return the product for recycling.

So, it makes more sense to charge a recycling fee at the point of sale.

Case 1

Cell phones, tablets, small laptops (screen size: 4”-15”):

Useful life=n=2 years

Recycling cost=RC=$5.00

Rate of interest=i=5%

Fee to be collected at the point of sale=PV=RC/(1+i)ⁿ=5/(1+5%)²=$4.54

Case 2

Large laptops, desktop monitors, small TVs (screen size: 15”-35”)

Useful life=n=3 years

Recycling cost=RC=$7.00

Rate of interest=i=5%

Fee to be collected at the point of sale=PV=RC/(1+i)ⁿ=7/(1+5%)³=$6.05

Case 3

TVs (screen size: > 35”)

Useful life=n=4 years

Recycling cost=RC=$10.00

Rate of interest=i=5%

Fee to be collected at the point of sale=PV=RC/(1+i)ⁿ=10/(1+5%)⁴=$8.23