A lot has been said about plastic pollution and how to address it. There is broad consensus among researchers and policymakers that plastic pollution harms both the environment and society and must be reduced. The cost of inaction is significant. According to the United Nations Environment Programme, plastic pollution was estimated to impose costs between USD 300–460 billion per year in 2023 [1].

What remains under discussion, however, is the solution. For some nations, the priority is to limit plastic production, while others believe that improving waste management would be sufficient to curb plastic pollution. 

From an economic perspective, under the assumption of ceteris paribus, the first option—limiting plastic production—would shift the supply curve. In the short run, this would increase plastic prices, raising the cost of goods that use plastic as an input, with potential general equilibrium effects given the importance of plastic across many sectors. In the medium and long run, higher costs could encourage the development of sustainable alternatives to conventional plastics. At this point, however, it remains unclear whether such alternatives would eventually lower consumer prices or whether higher prices would persist. If the latter occurs, the distributional effects could be significant, as increases in consumer prices tend to weigh more heavily on low-income households [2]. 

The second option focuses on improving waste management, including but not limited to recycling. A major challenge in recycling lies in identifying and sorting different types of plastic, which makes recycling more costly—especially compared to virgin plastic production, where prices do not reflect the negative environmental and social impacts (i.e., externalities). As a result, only about 9% of plastic waste is recycled globally [3]. While improvements in this area are needed, the current state of the recycling industry suggests that recycling alone is unlikely to significantly curb plastic pollution in the short- and medium-term. This approach also places a heavy burden on consumers, who are expected to reduce their plastic use and pressure industries to find alternatives. In practice, however, relying on consumer behavior and market incentives is unlikely to be sufficient in the short term. More effective progress is likely to come from policies and legislation that hold polluters accountable. 

Regardless of the options available, I find it challenging to make an informed decision without more economic studies—particularly cost-benefit and cost-effectiveness analyses. By providing concrete numbers, these studies would allow policymakers to rigorously compare the trade-offs (i.e., the costs and benefits) of different strategies for reducing plastic pollution. 

References: 

[1] United Nations Environment Programme. (2023). Turning off the Tap. How the world can end plastic pollution and create a circular economy. Nairobi 

[2] Oxford Economics. (2024). Mapping the Plastics Value Chain: A Framework to Understand the Socio-economic Impacts of a Production Cap on Virgin Plastics. 

[3] OECD (2022), Global Plastics Outlook: Economic Drivers, Environmental Impacts and Policy Options, OECD Publishing, Paris, https://doi.org/10.1787/de747aef-en.