The Economics of PRRIA: Facts and Fiction
Some very influential corporations and industry associations have collectively poured millions of dollars into lobbying efforts against the Packaging Reduction & Recycling Infrastructure Act (PRRIA) S.1464a / A.1749a. A common claim made by their ads and lobbyists is that PRRIA will drive up our grocery prices.
FALSE. It won’t, and it can’t. That math doesn’t work, and it’s not how their industry works either. They know this.
So, if you’ve been concerned about this claim, then please know that they’re lying. They’re lying to us with million-dollar megaphones. Not only will PRRIA not impact your grocery prices, it will greatly offset your local government’s municipal waste management costs. This may reduce your property taxes, waste collection fees, or social service costs, boost spending on under-resourced sectors, or enrich your community in other ways depending on how your municipality reallocates those funds.
If you want to understand the truth, read on…
Why is PRRIA important to me?
Have you ever purchased something online and received a large box with multiple layers of plastic or paper packaging around a small product that already had its own box and packaging? You pay for the management of that waste. You pay through your waste collection fees, property taxes or both. Currently, there’s little to no incentive for producers to reduce the amount of packaging they use, the types of plastic they use, or the toxic additives. Their only incentive is the cost of producing it.
Since before we were born, industry has been allowed to externalize these costs. PRRIA is an important step in changing that.
It’s also an urgent matter for our local economies. Packaging and paper represent about 40% of New York’s waste, and our landfills are maxing out. Multiple landfills will be closing next year, which will then drive up the costs of trash disposal. If New York fails to move forward with PRRIA another year, then that will be another year that we will not get reimbursed for our costs in managing this waste.
What would PRRIA cost manufacturers?
If passed, PRRIA will apply to only the largest manufacturers. They will pay an Extended Producer Responsibility (EPR) fee relative to the strain their packaging creates for our tax-funded waste management systems. The more packaging, the greater the fee. The more unrecyclable the packaging, the greater the fee.
If you compare these fees directly to the number of products they sell, the cost is negligible. This bar chart – based on data from Canadian EPR programs compiled by Resource Recycling Systems – shows how small the EPR fees would actually be: as little as 9 to 31 cents on a typical grocery haul.
But even these small fees will not be passed through to New York consumers. We explain why below.
What would PRRIA cost me?
Nothing. PRRIA will actually save you money, unless you’re a large corporation that sells packaged products in New York.
Won’t producers just raise New York grocery prices to recoup their EPR fees?
No. It would be very complex and costly to modulate prices by state and even more so by fees like EPR that are so small and variable by state and year. Given all the corporate fear tactics on this subject, you deserve more information.
First, let’s be clear about how much EPR fees actually are. Revisit the bar chart above. The small amounts at the end of each bar would be the increase in grocery prices if producers could pass on 100% of New York’s EPR fees back to New Yorkers through their distribution pricing… but they won’t.
Producers set their prices to the global market or by country. The latter happens often where there are tariffs or other relevant trade costs for their products. As you know, we don’t have checkpoints at state borders. Products are distributed freely throughout the United States. Producers don’t control this.
For example, the largest food distributor in the world is Sysco Corporation. Sysco has well over 300 distribution centers serving nearly 100 countries. In the US, their distribution centers are not restricted by state lines. The Sysco that serves New York City plus Westchester county (nearly half of New York State’s population) is based in New Jersey. It also serves most of New Jersey and some of Pennsylvania.
The products in the chart above are distributed through food distributors like Sysco. The companies that produce those products won’t require distributors to add 2 cents to a product’s price when they distribute to restaurants and grocery stores in New York. The cost of managing such tiny price differentials would be higher than the cost of paying New York’s EPR fees. The industry simply doesn’t work that way within any single country.
Studies support this. For example, a 2019 National Bureau of Economic Research study found that most U.S. food, drugstore, and mass merchandise chains charge nearly-uniform prices across stores, despite widely differing consumer demographics and local competition.
If major factors like income disparities do not drive large manufacturers to change prices per jurisdiction, PRRIA’s tiny fees certainly would not.
How will PRRIA benefit me?
PRRIA shifts packaging and waste management in ways that will reduce the pollution of our air, water, and other natural resources that our livelihoods depend on.
If you live in New York, PRRIA will also save local governments across our state roughly $568 million in reduced waste management costs in the next decade, according to a Beyond Plastics study. Much of the state’s packaging recycling costs – currently hundreds of millions of dollars – will also be reimbursed through EPR fees.
This chart shows New York’s projected savings in waste management.
How your local government reallocates those funds could mean reduced property taxes, waste collection fees, social service costs, or other benefits.
Why are they lying?
PRRIA represents a paradigm shift that is all-to-slowly spreading around the U.S., though other parts of the world are already far ahead. Japan implemented packaging EPR in 1995. South Korea’s program has achieved high recycling rates. The EU passed recent laws requiring all 27 member states to establish EPR packaging schemes, and many countries, including Germany, France, Spain and the Netherlands, have run successful programs for years. Countries in Latin America and Africa have also passed EPR laws.
States across the US are waking up to this economic injustice and introducing EPR schemes. Seven states have passed laws, and four more are considering them. Oregon’s program began operating last year. This collective movement represents a shift in industry responsibility that the biggest polluters vehemently oppose. Ultimately, the math for them is simple. The cost of their ads and lobbyists are less than their cost in accepting and complying with PRRIA, so they lobby against it.
What can I do to help?
Thank you! Here are two simple steps:
Call your Assemblymember today and say that you are a constituent (and business owner, if that is so) and that you’d like to see the Assembly pass A.1749a this year. That’s the Packaging Reduction & Recycling Infrastructure Act (PRRIA), and it died on the Assembly floor last year. We can’t wait another year!
Contact us at info@ny-sbc.org to learn how else you and your business can help us hold corporations responsible for the waste they produce.