So plastic bags are clogging up our drains. How do we solve the problem?
One way is to ban plastic bags. That is the typical solution we come up with for many problems. The thinking that informs such decision making is Bush-style “for us or against us”. The only reason why anyone would be against banning plastic bags is that they hate the environment, or are just evil capitalists concerned about their profits. Unfortunately, such thinking ignores the trade-offs inherent in any decision-making. For example, I usually avoid asking for plastic bags when I shop for little stuff close to my home. If I have to buy a bunch of bananas, I carry them in my hand. But if I have to carry stuff from a long way away, I get a bag. There is no point categorizing my decisions by asking: “Are you in favour of plastic bags or the environment?” Of course I care about the environment. I also care about my convenience and I trade off the two constantly.
Another way is to impose a tax on purchase of plastic bags. This is a good idea, and I might even support it if the money collected from the tax is used in collecting the garbage and disposing of them properly. This is a better idea because it imposes the costs where it belongs. It also puts the decision into my hands. Do I choose convenience or pay the price? It is upto me.
But this too is not my ideal solution.
It is not the use of plastic bags that is causing the problem. It is their disposal. So instead of charging at the point of sale, why not impose a charge at the point of disposal? I realise that this may not be practicable in India. It would be difficult to enforce in India which is why I’d support option 2. But if we could enforce it, this would be the best way to do it. Why?
This is why (via India Uncut). They have found a way to use waste plastic bags to pave roads. The linked article refers to Niger, but I remember reading somewhere that Bangalore is also doing the same. This is not a complete solution to the plastic problem, but it suggests what could be done if incentives were aligned properly. If residents are charged to dispose of their plastic bags, it gives an incentive to someone to come up with creative ways to dispose of these bags. Given that it would cost money to dispose of a bag, they would gratefully hand it over to someone who offers to take it on for free. Or perhaps the innovator may actually find it feasible to offer cash for those bags. It would depend on the economics of the thing. The important thing is that if you tax the sale of the bags instead of the disposal, this incentive would not arise.
I am using this example to illustrate a principle that the government should use while dealing with environmental issues – the polluter pays. More precisely, the polluter should pay in proportion to the pollution and at the point of pollution.
For another example of this, take the Delhi Government rule that only CNG buses are allowed. Is that the best way to control pollution? No, because if someone comes up with an engine that pollutes less than CNG, he will have to take a lot of trouble trying to get it introduced in the market. He will have to lobby the government to change the rules (and probably face up to counter-lobbying by makers of CNG engines.) Far better to impose pollution norms, and let the compliance with those norms be the headache of vehicle manufacturers. It is better to control at the point of pollution than at some upstream point.
Some months back, in a discussion with Gaurav Sabnis, he had lamented that environmental policy is one place where we capitalists enter a grey area. In one sense that is true. Even the solutions that I’ve outlined aren’t “elegant” ones. All of them give the government much more policy making power than we would like. But then, no one has managed to come up with a good solution, and I think that the solutions that work with the market are still better than the ones that use the heavy hand of regulation.