Drivers of Plastic Pollution: Multiple Market and Policy Failures

issue and is backed up by the private sector. More than 70 companies representing all sectors along the plastic value chain signed The Business Case for a UN Treaty on Plastic Pollution, led by the Ellen McArthur Foundation, and its manifesto.4 Despite corporate commitments, incentives in most markets encourage firms and households to increase plastic pollution. Without an enabling regulatory environment, corporate commitments will remain unmet and will not translate into investments and behavioral change.

Drivers of Plastic Pollution: Multiple Market and Policy Failures

The flow of plastic into the environment, rivers, and oceans is getting worse as production and demand for plastic increase globally. Managing plastic pollution therefore requires rethinking the whole value chain, from production of virgin plastics, through conversion and manufacturing of products, to solid waste management and the end of their lifetime in the environment. The key bottlenecks in the plastic value chain include the following:

• Incentives to increase plastic consumption: Upstream in the value chain, plastic production and consumption increase at an exponential rate, which overloads a downstream waste management system. Worldwide, plastic use has increased 20-fold in the past 50 years and continues to grow (Pew Charitable Trusts and

SYSTEMIQ 2020). If recent trends continue, waste generation in low-income countries is expected to triple between 2016 and 2050, while urban growth will increase pressure on solid waste management systems, further blocking sewers and drainage systems and exacerbating leakage into the environment (Kaza et al. 2018). The amount of plastic entering the oceans annually could nearly triple, from 11 million metric tons in 2016 to 29 million metric tons by 20405 (Pew Charitable

Trusts and SYSTEMIQ 2020). • Too few options and no incentives to reuse or substitute plastic: Consumers could be nudged to change their choices of products. Reusing, as a consumer choice, remains a small niche, and repair and remanufacture are nascent and require a change in product design and consumer habits. The use of unnecessary and harmful plastics, especially multilayer and single-use plastic packaging, is the most pressing problem (Ministerial Statement 2021; UNEP 2018). Without fundamental redesign and innovation, about 30 percent of plastic packaging could not be reused or recycled at a cost that firms and consumers would be willing to pay (Ellen

MacArthur Foundation 2017). • Too little and too costly recycling: Recycling markets have existed for many years but have remained small and limited to the relatively few most valuable plastic products. Only about 10 percent of plastic produced between 1950 and 2015 has been recycled globally (UNEP 2021), and of this, only 10 percent is recycled more than

once (converted back to the same products and recycled again, that is, in closedloop recycling) (Geyer, Jambeck, and Law 2017). The remaining 90 percent is either incinerated or disposed of in landfills, dumps, or the environment. The Chinese

National Sword Policy, introduced in 2018, banned the import of most plastic waste on the basis of contamination grounds and has disrupted global trade of plastic waste, having a domino effect in many countries either exporting or importing plastic waste.

At the same time, oil prices have been low between 2014 and 2020, which has made virgin plastic even cheaper compared with recycled plastics. The strong rebound of oil prices in 2021 and 2022 could be short-lived, requiring policy incentives to create and improve recycling markets. • Insufficient solid waste management: The circular solutions still rely on the capacity of the downstream waste management systems. The bedrock for any value creation in the plastic value chain is to channel all waste through formalized collection systems. As long as waste dumping into the environment is the cheapest waste management option for economic actors, any sustainable and circular waste management measures will be difficult to implement and enforce. Expanding waste collection services and sorting capacities in low- and middle-income countries, providing support to the informal sector, and building facilities as an intermediate solution to dispose of sorted waste materials that cannot be recycled economically must be applied together with circular strategies focused on waste prevention and reduction (World Bank 2021a). Once dumping is prevented, safe disposal and recycling are next-level foundational prerequisites for a transition up the waste hierarchy6 and toward a circular economy (EU 1975; World Bank 2021a).

Governments are trying different entry points to regulate plastic pollution. Most efforts so far have focused on the downstream part of the plastic life cycle, such as improving solid waste management systems, when plastic waste has already become postconsumer waste. Without incentives to reduce plastics at the source or to design products for upstream reuse, recycling, and repair, the waste collection and landfilling infrastructure becomes overloaded even in advanced countries. Waste management is costly, and the availability of investment and operational finance is arguably the single most critical factor in determining the sustainability of municipal waste services. Although revenues from recycled materials and energy tariffs can provide funds for operational costs, they are typically far smaller than the full costs associated with operating waste management systems (World Bank 2021a). For example, many countries subsidize sorting and recycling of waste, but plastic products, especially packaging, are becoming increasingly difficult and costly to separate and recycle, being made of multiple materials, layers, and additives that make downstream separation for recycling purposes prohibitively costly.