Case Study

DUBLIN — There is something missing from this otherwise typical bustling cityscape. There
are taxis and buses. There are hip bars and pollution. Every other person is talking into a
cellphone. But there are no plastic shopping bags, the ubiquitous symbol of urban life.
In 2002, Ireland passed a tax on plastic bags; customers who want them must now pay 33
cents per bag at the register. There was an advertising awareness campaign. And then
something happened that was bigger than the sum of these parts.
Within weeks, plastic bag use dropped 94 percent. Within a year, nearly everyone had
bought reusable cloth bags, keeping them in offices and in the backs of cars. Plastic bags
were not outlawed, but carrying them became socially unacceptable — on a par with wearing
a fur coat or not cleaning up after one’s dog.
“When my roommate brings one in the flat it annoys the hell out of me,” said Edel Egan, a
photographer, carrying groceries last week in a red backpack.
Drowning in a sea of plastic bags, countries from China to Australia, cities from San
Francisco to New York have in the past year adopted a flurry of laws and regulations to
address the problem, so far with mixed success. The New York City Council, for example, in
the face of stiff resistance from business interests, passed a measure requiring only that
stores that hand out plastic bags take them back for recycling.
But in the parking lot of a Superquinn Market, Ireland’s largest grocery chain, it is clear that
the country is well into the post-plastic-bag era. “I used to get half a dozen with every shop.
Now I’d never ever buy one,” said Cathal McKeown, 40, a civil servant carrying two large
black cloth bags bearing the bright green Superquinn motto. “If I forgot these, I’d just take
the cart of groceries and put them loose in the boot of the car, rather than buy a bag.”
Gerry McCartney, 50, a data processor, has also switched to cloth. “The tax is not so much,
but it completely changed a very bad habit,” he said. “Now you never see plastic.”
In January almost 42 billion plastic bags were used worldwide, according
toreusablebags.com; the figure increases by more than half a million bags every minute. A
vast majority are not reused, ending up as waste — in landfills or as litter. Because plastic
bags are light and compressible, they constitute only 2 percent of landfill, but since most are
not biodegradable, they will remain there.
In a few countries, including Germany, grocers have long charged a nominal fee for plastic
bags, and cloth carrier bags are common. But they are the exception.
In the past few months, several countries have announced plans to eliminate the bags.
Bangladesh and some African nations have sought to ban them because they clog fragile
sewerage systems, creating a health hazard. Starting this summer, China will prohibit sellers
from handing out free plastic shopping bags, but the price they should charge is not
specified, and there is little capacity for enforcement. Australia says it wants to end free
plastic bags by the end of the year, but has not decided how.
Efforts to tax plastic bags have failed in many places because of heated opposition from
manufacturers as well as from merchants, who have said a tax would be bad for business. In
Britain, Los Angeles and San Francisco, proposed taxes failed to gain political approval,
though San Francisco passed a ban last year. Some countries, like Italy, have settled for
voluntary participation.
But there were no plastic bag makers in Ireland (most bags here came from China), and a
forceful environment minister gave reluctant shopkeepers little wiggle room, making it
illegal for them to pay for the bags on behalf of customers. The government collects the tax,
which finances environmental enforcement and cleanup programs.
Furthermore, the environment minister told shopkeepers that if they changed from plastic
to paper, he would tax those bags, too.
While paper bags, which degrade, are in some ways better for the environment, studies
suggest that more greenhouse gases are released in their manufacture and transportation
than in the production of plastic bags.
Today, Ireland’s retailers are great promoters of taxing the bags. “I spent many months
arguing against this tax with the minister; I thought customers wouldn’t accept it,” said
Senator Feargal Quinn, founder of the Superquinn chain. “But I have become a big, big
enthusiast.”
Mr. Quinn is also president of EuroCommerce, a group representing six million European
retailers. In that capacity, he has encouraged a plastic bag tax in other countries. But
members are not buying it. “They say: ‘Oh, no, no. It wouldn’t work. It wouldn’t be
acceptable in our country,’ ” Mr. Quinn said.
As nations fail to act decisively, some environmentally conscious chains have moved in with
their own policies. Whole Foods Market announced in January that its stores would no
longer offer disposable plastic bags, using recycled paper or cloth instead, and many chains
are starting to charge customers for plastic bags.
But such ad hoc efforts are unlikely to have the impact of a national tax. Mr. Quinn said that
when his Superquinn stores tried a decade ago to charge 1 cent for plastic bags, customers
rebelled. He found himself standing at the cash register buying bags for customers with
change from his own pocket to prevent them from going elsewhere.
After five years of the plastic bag tax, Ireland has changed the image of cloth bags, a feat
advocates hope to achieve in the United States. Vincent Cobb, the president of
reusablebags.com, who founded the company four years ago to promote the issue, said:
“Using cloth bags has been seen as an extreme act of a crazed environmentalist. We want it
to be seen as something a smart, progressive person would carry.”
Some things worked to Ireland’s advantage. Almost all markets are part of chains that are
highly computerized, with cash registers that already collect a national sales tax, so adding
the bag tax involved a minimum of reprogramming, and there was little room for evasion.
The country also has a young, flexible population that has proved to be a good testing
ground for innovation, from cellphone services to nonsmoking laws. Despite these favorable
conditions, Ireland still ended up raising the bag tax 50 percent, after officials noted that
consumption was rising slightly.
Ireland has moved on with the tax concept, proposing similar taxes on customers for A.T.M.
receipts and chewing gum. (The sidewalks of Dublin are dotted with old wads.) The gum tax
has been avoided for the time being because the chewing gum giant Wrigley agreed to create
a public cleanup fund as an alternative. This year, the government plans to ban conventional
light bulbs, making only low-energy, long-life fluorescent bulbs available.
Questions:
1) Describe the plastic bag problem using economic concepts/tools presented in class.
2) Why did Ireland’s tax work so well? What factors contributed to the success?
3) What options are there for a city or a country to get rid of an undesirable good such
as plastic bags?
4) Are plastic bags a problem in Kuwait? What should we do? Present your proposal.