Select

TABLE 4.3 List of Policy Instruments from Which Plastics Policy Simulator Users Can Select

Category

Taxes and fees

Public financing

Bans and standards

Behavioral change Governance Policy instruments for system reform

Mandatory modulated extended producer responsibility fees Virgin plastic excise tax on all packaging Plastic excise tax on all packaging Plastic excise tax on individual products Carbon tax Deposit return schemes Landfill tax Household fees

Alternative materials Reuse systems Formal collection Informal collection Sorting facilities and operations Mechanical recycling Chemical recycling Landfill facilities and operations Incinerators Refuse-derived fuel

Plastic labeling Product restrictions / bans Mandatory product design requirements Target reduction in plastic waste imports Consumer education campaigns Improvements in governance system

Source: Adapted from World Bank 2022a. Note: The plastics policy simulator model was designed to offer a wide range of options available to policy makers and does not reflect the World Bank Group’s support of one option versus another.

in the technical core of the model. Application of policy instruments is not costless. For governments, the model incorporates administrative costs of implementing and enforcing policy instruments. The PPS also includes transaction costs of compliance with some policy instruments by economic agents represented in the system. For example, in Indonesia, stakeholders indicated that about 4 percent of the total value of subsidies that formal waste collectors receive from the government is spent on application for funds and reporting how they were spent.

Policy instruments can be applied individually or combined in many configurations, or packages. Combining policy interventions is a common practice in many countries and is a good practice, because—as discussed earlier—multiple market and policy failures throughout the plastic life cycle compound plastic pollution. Many perverse incentives overlap, requiring multiple policy instruments to correct them.

Policy instruments naturally interfere and interact with one another. Some combinations of policy instruments produce incoherent, conflicting incentives and lead to policy failures. For example, subsidies for oil and gas used by the petrochemical industry favor the use of virgin plastics by making them unfairly competitive compared with recycled plastics or nonplastic alternatives. In the presence of fossil fuel subsidies, the EPR fees may not provide expected incentives to change consumer choices and increase sorting and recycling. Examples of synergies among policy instruments are also common. Investment subsides for collection and sorting of waste and taxes on virgin plastic packaging, together with behavioral nudges for consumers to choose alternatives, encourage product design for recycling, decrease downstream costs of recyclers, and allow recyclers to increase volumes through commercially viable investments.

Geographical archetypes account for country-specific differences within the plastic value chain. The PPS model is divided into different geographic archetypes to account for the fact that different locations have different characteristics—for example, quantities and patterns of consumption of plastic products, waste composition, costs of collection and sorting, prices, plastic litter, infrastructure, proximity to recycling, and population density—and require customized solutions. Map 4.1 provides an example of how archetypes were broken down in Indonesia, where the model is split into four different geographic archetypes—megacities, medium-sized city and suburban, periurban and dense rural area, and remote area. All model calculations are conducted separately according to geographic archetype and then aggregated to the national level. This means that archetypes can be defined flexibly (the archetype definition could be different in each country), and the number of archetypes could be different for each country.

The PPS Is a Dynamic Simulation Reflecting Current Knowledge and Its Limitations. In the PPS, the use of materials and technologies is limited by their availability and market valuation at the time of simulations. Thus, the PPS must be updated as innovation advances and more affordable solutions are brought to market. In addition, several factors such as health and hygiene impacts, accessibility, safety, and availability of feedstocks are incorporated qualitatively into the model. Although the PPS identifies effective and implementable policy packages, it does not substitute for a detailed design and impact assessment of specific policy instruments. The PPS is not a macroeconomic model, although it can be linked to input-output tables, fiscal frameworks, or macroeconomic models. Likewise, it is not designed to conduct detailed social distributional analysis, because the financial results for households are not broken down according to income group. The PPS results can be used as input to microsimulation models that can calculate the policy impacts on income and poverty.