530SW142C
       Prepublication  issue for EPA libraries
      and State  Solid  Waste Management Agencies
               YOSEMITE  NATIONAL PARK

       BEVERAGE CONTAINER  DEPOSIT EXPERIMENT

                   FINAL REPORT
This final report (SW-142a) describes work performed
    for the Federal solid waste management program
             under contract no. 68-01-2981
   and is reproduced as  received from the contractor
          Copies will  be  available from the
       National  Technical  Information Service
             U.S.  Department  of  Commerce
            Springfield,  Virginia  22161
                         A. jk .08812
        U.S.  ENVIRONMENTAL  PROTECTION AGENCY

                        1977

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This report as submitted by the grantee or contractor has been
technically reviewed by the U.S. Environmental  Protection Agency (EPA).
Publication does not signify that the contents  necessarily reflect the
views and policies of EPA, nor does mention of  commercial products
constitute endorsement or recommendation for use by the U.S.  Government.

An environmental protection publication (SW-142c) in the solid waste
management series.

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                            ACKNOWLEDGMENT





     This project was  conducted  by the Research Triangle Institute,



Research Triangle Park,  North  Carolina,  pursuant to Contract No.



68-01-2981  with the  Environmental Protection Agency.  The statements,



findings, and conclusions  presented  in this report do not necessarily



reflect the views of the Environmental Protection Agency.



     Tayler H. Bingham was  project manager for this study.  Jerome A.



Olson was primarily responsible  for  the  development of the statistical



estimates.   Juanita Daber  assisted in writing this report.



     Our appreciation  is extended to individuals of the Yosemite Park



and Curry Co. and of the National Park Service for providing the neces-



sary data and interpretations.   In particular, from Curry Co. we would



like to cite Edward Hardy,  Chief Operating Officer; Garrett DeBell; Art



Goertzen, Jr.; John  Crofut  and William Letts  and from National Park



Service, Leonard McKenzie  and  Jeri Andrews.  Marion Thompson of EPA was



project officer for this study.  Her interest and guidance are very much



appreciated.
                                   in

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                          TABLE  OF  CONTENTS



                                                                Pjge




ACKNOWLEDGMENT	     Ill



LIST OF FIGURES	     vii



LIST OF TABLES	      ix



1.   Introduction  	       1



2.   Findings	       2



3.   Yosemite National  Park	       3



4.   The Deposit System	       5



5.   Deposit System Impacts   	       6



     5.1  Beverage Sales and Packaging Mix	       6



          5.1.1  Sales	       7



          5.1.2  Packaging Mix	      13



     5.2  Container Return Rates	      15



          5.2.1  Vended Sales	      21



     5.3  Recycling, Solid Waste, and Litter	      22



     5.4  Economics	      23



          5.4.1  Handling Costs	      24



          5.4.2  Revenue	      27



          5.4.3  Gross Profits	      28



          5.4.4  Net Profits	      31



BIBLIOGRAPHY	      35



APPENDIX



A:   DAILY SALES AND RETURNS	     A-'!



B:   MONTHLY  VENDED SALES	     B-'l
                                  IV

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                           LIST OF FIGURES





Figure                                                         Page



   1.    Daily beverage sales	      8



   2.    Daily beverage sales  and returns	     17



   3.    Daily return  rate	     19

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                            LIST OF  TABLES


Table                                                            Page

  1.    National  Park System,  1974	       4

  2.    Recycled beverage containers, summer 1976	      23

  3.    Container handling costs  by activity	      25

  4.    Container scrap values	      29

  5.    Gross profit rates by container and  return rates ...      30

  6.    Total handling costs  and  revenues by activity  ....      32

  7.    Summary of the economics  of the Yosemite Deposit
       System	      33

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               YOSEMITE NATIONAL PARK DEPOSIT EXPERIMENT







1 .    Introduction



     On May 17, 1976 the Yosemite Park and Curry Co.  with the support



of the National Park Service and the Environmental  Protection Agency



voluntarily instituted a 5-cent deposit on all  beer and soft drink-



containers, both retail and vended, sold in Yosemite National Park,



California.  Prior to the promulgation of Beverage Container Guidelines



applicable to Federal installations in September "'976, the Yosemite Park



and Curry Co. decided to make the deposit system a permanent operating



feature.  The purpose of the deposit is to provide consumers with a



monetary incentive to return empty containers for a deposit refund.



This reduces the probability that containers will be discarded as litter.



Beverage containers are returned to the beverage distributor if they are



refiliable bottles or sold as scrap if they are nonrefillable bottles or



cans.  The sale of returned containers as scrap helps to finance the



program.  It also reduces the solid waste management burden in the Park,



Additionally, other environmental benefits are obtained when recycled



materials are substituted for virgin materials at the production level.



     The purpose of this report is to present the results or impacts of



the deposit experiment over its first summer of operation.

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     The major impacts  examined in this  report  are  the  effects  of  the

Yosemite experimental  deposit system  on:

          1)  beverage  sales  and packaging mix
          2)  container return rates
          3)  recycling,  solid waste,  and litter
          4)  economics

     The general findings  of  the experiment  are summarized below  and

discussed in detail  in  the remaining  sections  of  this report.


2.   F i ndi ng s

     1) beverage sales  and packaging  mix - Two analyses of the  impact  of

the deposit on beverage sales were conducted,  one based on total  sales

and one on vending machine sales.  Both  analyses  indicated that 1976

beverage sales, both retail and vended,  were below  the  sales expected  for

1976.  However, it is not  possible to present  convincing evidence  as to

the cause of the sales  declines since factors  other than deposits  (e.g.

weather, number of visitors to the Park, prices)  that are known to affect

beverage sales are difficult to adjust for with the available data.

     In mid-summer beverages in bimetal  containers  (7-Up and Shasta) were

discontinued due to the absence of an acceptable secondary market  for  the

returned bimetal cans.   With this exception  consumers apparently con-

tinued to purchase beverages  in the available alternative brand/container

combinations in about the same  proportions as  they had before the  deposit

system was  initiated.  Ninety-eight percent  of carbonated beverage sales

in Yosemite are in cans.

     2)  container return  rates  - Approximately 7 out of 10 beverage

containers  sold in Yosemite  during the summer were returned.

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     3)  recycling, solid waste,  and litter  - About  30  tons  of  beverage



containers were recycled.   Of this  total  74 percent  was  aluminun;  15



percent,  steel; and 11  percent,  glass.  Approximately  83 percent  of the



total  recycled beverage containers  had  been returned for the deposit



refund.   Solid waste was also reduced by«30 tons.   Cans marked for



deposit were seldom found as  litter in  the Park.



     4)  economics - The economics  of  the  deposit  experiment were



estimated by comparing  revenues  with  costs.  Revenue is  available from



the scrap value of the  returned  containers  and  the  forfeited deposits on



containers which are not returned.   Costs  include  handling  (labeling,



collecting deposits, returning deposits,  disposing  of  containers  and



bookkeeping), equipment and supplies, and managerial and supervisory



time.   Considering all  costs  Curry Co.  estimates  that  the system  broke



even in the first summer of operation.  Eliminating costs which were



unique to the first summer of operation,  the system would yield an



expected profit of approximately $8,000 in  future  summers.  Profit



increases to approximately $12,000, if  one  further  subtracts the  Yosemite



Park and Curry Co. estimate of the  value  of  supervision  and management



time which they would expect  to  allocate  once the  system was in



operati on.





3.  Yosemite National Park



     Yosemite is one of 38 National Parks  in the system  controlled  by the



National  Park Service (NPS).   It has more overnight visitors than any



other park (table 1).  Yosemite  is located  in eastern  California, about



218 miles from San Francisco  and 275 miles from Los Angeles in the  heart



of the Sierra Nevada Range.  The Park,  which is 1,189  square miles  in

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               Table  1.   National  Park  System,  1974

Number
of areas
National Park System 309
National parks 38
Major national parks
Great Smokey Mountai ns, North
Carol i na-Tennessee
Grand Teton, Wyoming
Acadia, Maine
Olympic, Washington
3ocky Mountain, Colorado
Hot Springs, Arkansas
S hen an do ah, Virginia
Yosemite, California
Vei lows tone, Wyoini ng- Idaho-
Montana
Grand Canyon, Arizona
Mammoth Cave, Kentucky
Hawaii Volcanoes, Hawaii
Glacier, Montana
Mount Ranier, Washington
Zion, Utah
National monuments 83
National parkways 6
National recreation areas 16
National seashores 9
National capital parks 1
Other 156
National historical, archeo-
logical, and military areas
Miscellaneous other areas
Annual vis

Total
217.4
53.1
38.4

9.6
3.0
2.8
2.7
/ , 0
2.4
2.4
2.3

2.0
"i .9
1.8
1.4
1.4
1.2
1.0
15.2
34.5
18.1
11.5
8.7
75.9

72.9
3.0
its (millions)

Overnight
15.4
NA
7.5

0.6
0.5
0.2
0.5
0.3
<0. 1
0.6
1.8

1. 1
0.8
0.2
0.1
0.4
0.2
0.2
NA
NA
NA
NA
NA
NA

NA
NA
NA - not applicable



Source:  U.S. Department of the Interior, National Park Service, 1974,

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area or about  the  size  of  the State of Rhode Island, is administered by



the National Park  Service.  Most  concessions in the Park including all



beverage concessions  are operated for the NPS by the Yosemite Park and



Curry Co.  (Curry Co.),  which  in turn is owned by the MCA, Inc.



     For the  last  several  years the Park has received more than two mil-



lion visitors  annually.  About 80 percent visit Yosemite during the



months from May through September.  This experiment ran for 126 days,



from May 17 to September 19,  1976.  During this time there were about



1.3 million visitors.   For the month of August, which is the peak month



of the year,  there was  an  average of about 15,000 people (both visitors



and employees) in  the Park each day--about 12,000 staying overnight.



     Between  70 and 80  percent of all visitors come to Yosemite from



California and nearly 20 percent  from Los Angeles County alone.  Out-



of-state visitors  primarily come  from western, mid-western and middle



Atlantic states.   The largest proportion of  the visitors (44 percent)



are between 18 and 29 years of age  and the largest  occupational cate-



gory represented is professional  and technical workers (40 percent).



Over 70 percent of the  visitors have attended college and nearly one-



half have a college degree.  Over 70 percent of those visiting Yosemite



stay no more than  two nights  (U.S.  Department of Interior, 1973).





4.  The Deposit System



    Yosemite has 23 retail outlets  and 34 vending machines dispersed



over the entire Park area. Approximately 80 percent of beverage sales



are through the 19 retail  outlets and 30 vending machines in the

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Yosemite Valley.   Soft drinks  and  beer  are  delivered directly to the Tare



retail  outlets,  otherwise to a central  warehouse or, in the case of



beverages for vending machines,  to a  storage trailer.



     The containers are then hand-stamped to indicate that a deposit is



to be paid on the container.  The  stamping  is  done  either  at the retail



outlet,  or in the case of vending  machine drinks, at a separate storage



area.  Deposits  are collected at the  poi nt-of-sal e  by the  cashier  or



incorporated as  part of the sale price  for  vendi ng  machi ne drinks.



Deposits are refunded upon presentation of  the  labeled container  at any



retail  establishment or at the central  recycling center that is located



in the main shopping area of the Valley.  Returned  containers, other



than refill able bottles, are sorted by  material, bagged,  transferred to



a centrally located trailer in the Park,  and stored,   ,-Jhtn the trailer



is full   it is taken to Fresno, California where the containers are sold



for scrap.  Refillable containers  are picked up by  the distributor for



reuse.





5.   Deposit System Impacts



     The major impacts of the deposit system  discussed below  are:  (1)



beverage sales and packagi ng mix,  2)  container return  rates,  3) re-



cycling,  solid waste, and litter,  and 4)  economics.





     5.1   Beverage Sales and Packaging  Mix



     The  possible  impacts a deposit system  could have  on  the  total sales



of  beer  and soft drinks  and on the packaging mix have  become major issue-



It  is believed by  some that a deposit system  reduces beverage  sales  due



the  increased out-of-pocket cost  to consumers  who  do not  return  empty

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containers  for  a refund  or  the  indirect  cost  associated with the incon-

venience of returning  them.

     Consumers  who  previously purchased  beverages in nonref 111 abl e bottles

could shift e^the^  to  refill able  bottles  (returning or discarding them) o>~

to cdns; consumers  who previously purchased beverages in cans could shift

to >-ef il 1 abl e bottles.

     The experiment  did  not provide  the  data  needed to thoroughly evaluate

thf' s .jl es  an') packaging  mix ^n a  statistically rigorous fashion.*  A dis-

cussion of  the  possible  change  in beverage sales  and the shift  in con-

tai npr mix  due  fo the  Yosemite experiment  follows.


     ?.!.!   Sales

     Over the summer season 54,325 cases  (at  24 containers  per  case) of

b'_-er and soft drinks were sold in the  Park.   The  greatest majority of  these

sales was in the Valley.  According  to Curry  Co.  personnel  daily beverage

sales vary significantly (figure  1)  for  the following reasons:

     i)  the daily variation in the  number of people in the Park, and

     2;  the variation in weather (perhaps the most significant
         factor affecting beverage sales).
     *To estimate the impact  of  deposits  on  sales  and  packaging mix ideal-
ly requires beverage sales  and packaging  data  for  previous  periods, iden-
tification of independent variables  other than the  deposit  (i.e. weather
conditions, price, income of  visitors,  type  of container, available brands)
which may affect sales and packaging and  historical  estimates  of these
variables.  Given these data  one would  then  statistically evaluate the ef-
fect of the independent variables on sales  and the  packagi ng mix.  After
allowing for the effects of these variables  in 1976, next examine the
extent that the predicted 1976 total  sales  and packaging mix differed from
the actual.  The differences  would be attributed to the deposit system.

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          .   .   .    .   .   .-  .  i   .
     6   8  10  12 If  16  18 ?,C  22 2f 26  28 30
                June
(A/iA  : I  .  !.. r. i  • I  i  I L..I.J !
2  f   6  8  10  12 If  16  18 20  22 21- 26  28 30
                            Legend:
                              .      weekend
                          ////  holiday
    Figure 1.  Daily  beverage sales
                july

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o
o
a:
 .
or
c±
cr
a
en
a
cr
CO
O
CO
z
o
o
cr
CO

or
ac
a
           2   1   6  8  10  12
                              16  18 2C 22  21 26  28  30

                             DRY
                               Aug.
20


18


16


If


12


10


 8


 6
                                           '   '    '
                                                              I
           2  1   6   8 10  12 11  16  18 20  22  21 26  28 30

                                 DRY      Legend:


                               Sept.       _      : i   weekend

                                          '////   holiday
                Figure  1.   Daily beverage sales (Cont.)

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     Thus  one could hypothesize  that  per  capita  beverage sales were rela

to weather.*  Estimates  of  this  relationship were statistically develope
     *To test for the  effect  of  price  variation on  beverage sales a pric
variation must exist.   Since  there was  no  price variation in the Park
during the 1976 period this  effect could not  be estimated.

     **The procedure was  as  follows.   First,  estimates  of the number of
people in the Park daily during  the  peak season were  developed from NFS
data.  Daily weather data for the Park  were obtained  from the U.S.
Department of Commerce.   Finally,  statistical  relationships between per
capita beverage sales  and the weather  conditions  in the Park were
estimated.
     The NPS counts the number of  vehicles entering the Park daily.  Eac
vehicle is estimated to average  3.5  visitors.  Based  on the point of ent
to the Park and survey estimates of  the average length  of stay of vi si tc
for  each point of entry,  estimates of  the  cotal visitor-hours can b>3 de-
veloped for each day of the  summer.   (NPS  subtracts from  the vehicle dat
NPS  and other Park employee  vehicles and also adjusts for bus loads of
visitors.  However, this has  only a  small  effect  on their estimate of
visitor-hours.)  Using the NPS vehicle data  and the procedure outlined a
the  total visitor-days for the 126-day period were  e:"i^ated to  be 2.675
million (see appendix  A).   In addition, there were  1,500 to 2,200 em-
ployees of NPS and Curry Co.  in the  Park during the peak season.  Using
the  1,500 value raises the estimated total to 2.865 million person-days.
     Since the only Yosemi te weather data  avai 1 abl e were  daily maximum ;
minimum temperatures for the  Valley, the following  dai 1y consumption mo(
was  estimated for the  126 days using the standard stati sti cal technique
ordinary 1 east-squares regression:

(1 )                    In PCS = 1.93 In TEN>  - 8.98
                               (8.57)         (-9.46)

                                                   R2 =0.40
where
      PCS = per  capita sales, units  per person-day,
     TENP = average temperature, F°, and

the  number in  parenthesis below the  estimated coefficients  is  the t-stal

     Logarithmic  coefficients provide the  best quantitative  approach si
the  coefficient  on  average temperature can be directly interpreted as  t
"elasticity" of  per capita sales to  the average temperature.
     This estimated model attributes 40 percent  (R2 = 0.40) of  the  dail
variance  in  per  capita beverage sales  to the  daily variance  in  the  aver
temperature.  The model's explanatory  power  is low due  to the  likelihoo
that the  procedure  used to estimate visitor-days  is not as  accurate  as
should  be.  Also the  lack of  inclusion of  other  possible explanatory
variables besides  weather has affected the results.
                                    10

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     The  results  of  this  analysis indicate that beverage sales in the

'ark werac;>'d  0.5  units dsily per capita.*  The hypothesized effect of

weather  on  , al es  .5  stati stically verified—every one percent increase

in average  temperature  "esults  in an increase of 1.9 percent in per

capita sales.   The convincing evidence of the effect of weather (i.e.,,

tenperature) on beverage  sales  emphasizes the desi rabi 1 ity of correcting

for this effect when evaluating the  impact of deposits  on per capita

s a Ies.

     Two analyses  of the  sales  impact  of  the deposit system were

conducted.   In tK- first,  equation  (1) above wac solved for expected

dail , per  api ta  ales  ising 1975 daily average ; emperatures over the

sane 126-cLy period as  the  deposit  system was in existence in 1976.

Then, using the sane procedure  as described above to estimate the number

of people in the Park daily,  expected  total daily sales for 1975 were

computed and summed over  the 126-day period.  This  expected value was

then compared to the estimated  actual  sales for the 126-day period  in

1975.  "ihese results are  shown  below.


                                    	Beverage  sales  (cases)
                                     Actual     Estimated     Expected

      1976
        entire year                  73,953
        126-day perid                54,325

      1975
        entire year                  81,560
        126-day period                 —        59,913       56,952
     *An unknown quantity of beer and soft drinks  is brought  into the
Park by vi si tors.
                                   11

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     The estimated sales  value (59,913)  was  developed  by applying  the

126-day share of total  1976 beverage sales to the total  1975 beverage

sales value supplied by Curry Co.   The results suggest that the expected

1975 sales (56,952 with deposit)  for the 126 day period would have been

5 percent less than the estimated 1975 sales (59,913 without deposit)
                                          *
for this period.  We cannot, however, be certain about what to attribute

the 5 percent difference because other factors which could affect, per

capita sales were not controlled.   Although this approach was an attempt

at measuring the effect of the Deposit on sales, it cannot be vigorously

defended as indicating that the deposit caused a sales decline in 1976.

     A second analysis was conducted using vended soft drink sales for

the 1973-76 period.  Vended sales are of particular interest because it

is frequently speculated that deposits would significantly reduce vended

sales since consumers of vended soft drinks are alleged to be especially

convenience oriented.  During the vended test period, vended sales

represented about  13 percent of total beverage sales on a units basis.

     Another consumption model was estimated using monthly vended sales

data, 1973-76,  as  presented in Appendix B.  Because the price of vended

soft drinks rose  from 25 to 30 cents per can beginning  in August 1977  ;;t

was possible to  include price variation in the model.*  However, because

the number of observations  is small we can expect to identify only

strong  effects.
     *The estimated monthly vended consumption model is:

  (2)   In PVVS = - 0.04  In YEAR + 0.33 In PRICE + 1.49 In TEMP - 7.87
              (-0.51)         (0.46)          (2.97)        (-3.01)
                                                          R2  = 0.39
 Where
     PVVS =  per visitor vended sales, units per visitor,
     YEAR =  a dummy variable, set equal to zero for ye^rs
             prior to  1976, set equal to one for 1976,
     TEMP =  average temperature, F°, and
     PRICE - soft drink price, cents per unit divided by the
              consumer price index.

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     This model  attributes  39 percent  of  the monthly variation  in  vended

s jf t drink sales per  visitor  to the  combined effects of YEAR, PRICE, and

"ENP .   Obviously the  model  is limited  by  the use of monthly data whereas we

v/ould have preferred  to use daily data.   It is  interesting to note, however,

Hiat the coefficient  (1.49) on average  temperature for the monthly vended

node1  is similar to the temperature  coefficient  (1.93) in the daily model

and is stati sti cal 1 y  si gnif icant at  normal ly accepted confidence ''evels  (95

percent).  The price  of vended soft  drinks  has  a small positive effect on

vended sal es.*

     The sign  on YEAR is negative as is expected.  Letting YEAR entirely

represent the  effect  of the deposit  system, the  best estimate of the true

effect of the  deposit system  shows a reduction  in  vended sales  per visitor

of 4 percent.   However with only 20  observations,  5 for 1976, the  statisti-

cal quality of this estimate is poor.   Specifically, 95 percent of the time,

with data of  the quality used in this  analysis,  we would expect the true

value of vended sales per visitor to range  between -20 percent  and 0 percent

 (with positive values being rejected on the belief that there is no reason

to expect a deposit system to increase vended sales).


     5.1.2  Packaging Mix

     At Yosemite over 98 percent of  all the beverages are sold  in  cans.

Cans with nondetachabl e closures are preferred  because the  detachable

flip-tops are frequently littered; however, beverages are sold  in  cans

with and without detachable tops.  For many years  it has been the  policy,
     *Thi s peculiar result is not alarming since  the  t-statistic  of  0.46
 indicates that the estimated positive effect  is so weak that  it could  be
 obtained merely by chance.
                                    13

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as requested by the  NPS,  to minimize sales of bottled beverages because of

the problems to humans  and hazards  to  animals when bottles are littered and

broken.   Some soft drinks  are  sold  in  large, mostly refillable bottles.

Bottl ed mixers, 10-ounce  Schweppes  products, and 12-ounce bottles of

imported beer are also  sold  in nonref il 1 aSl e bottles.  In total, about

24,000 bottled beverages  were  sold  in  the Park in the 1976 summer season.

There was no change  in  the kinds  of  containers sold in the Park in 1976.

     A deposit system may create  the  potential for shifts in the packaging

mix as consumers who discard the  empty container would pay a higher price;

that is, they would forfeit  the deposit and those who return the container

would incur some inconvenience.   The result would be reflected in changes

in the rate of beverage sales  by  container type—some beverage-contai ner

combinations being purchased more frequently and others less frequently

than prior to the institution  of  the  deposit system.*  This behavior would

result in shortages  for some beverage-contai ner combinations and surpluses

for  others.  Retailers  would presumably order more of the products  in  short

supply and less of those for which  surplus supplies  existed experimenting

until they again found  the new optimum order rate for each beverage-

container  combination.

     As  noted above, Curry Co. is the  prime concessionaire at Yosemite,  It

offers for sale and sells primarily beverages  in  cans with prices being set
      *The effect of brand loyalty and consumer  choice  is  important to  em-
 phasize  here.  If the brand is offered in alternative  containers  then  con-
 sumers  have the opportunity of switching containers  without  switching
 brands.  On the other hand if brands tend to be  offered in only one  con-
 tainer  type then the consumer must switch brands to  switch containers.
 Further, even though beverage distributors may offer their product in  al-
 ternative containers, retailers may not elect to stock all types.


                                    14

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by the NFS.   No change  in  the  brand-contai ner combinations offered for sale



A as made by  Curry Co.  with one important exception discussed below.  The



NPS policy of minimizing bottled  beverage sales was not changed after insti-



tuting the deposit system.



     In the  absence of  a competitive market with a broad choice of brands



and containers it is difficult to generalize regarding the impact of the



deposit system on package  mix.  However,  in Yosemite no shortages occurred



t n t he refillables offered for sale nor were there any requests by visitors



for brands or sizes of  beer and soft drinks in refill able bottles other than



those carried.  Therefore,  at  least in this setting, no significant changes



in packaging mix were either  possible or requested by visitors.



     The exception noted above was  the bimetal can.  The closest market for



returned bimetal cans is South San Francisco whereas aluminum  cans could be



sold to a scrap dealer  in  Fresno.  Therefore, for  all but a couple of



specialty beverages, those in bimetal cans were discontinued about mid-



summer.  The primary brands affected were 7-Up and Shasta.





     5.2  Container Return Rates



     For the 126-day test  Curry Co. personnel tabulated daily  deposits paid



and returned for each of 23 retail  and 34 vending  locations.   These data,



which are summarized in appendix  A are the basis of  the conclusions drawn



here.



      Over the entire 126-day period 1,303,800 bottles and cans of beer and



soft drinks were sold in the Park.  Deposits were  refunded on  903,800 con-



tainers; therefore, the return rate for the summer averaged 0.69 or said



another way, almost seven  out of  every ten beverage  containers sold were



returned.  According to Curry Co. personnel operating the recycling center,





                                    15

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probably a small  share of  the  total  returns  are by scavengers who collect

littered containers or who obtain  them  from  trash receptacles, dumpsters,

transfer stations and the  landfill.

     Daily beverage sales  and  returns  are  shown in figure 2, and simple

daily return rates  (developed  by dividing  returns for the day by sales

for the day) in figure 3.   The lagged  structure of container returns,

and the effect of the day-of-week  and  day-of-summer  on return rates were

i nvesti gated.

     Briefly summarized,  it was  estimated  that  about  39 percent of con-

tainers sold are returned  on the day of sale,  15 percent one day after,

6 percent  wo day,  aftf,  4 percent  three  days  after  and the remaining  5

percent mo e than three days after the  date  of  sale.*

     The day of the week analysis  was  confounded by  the presence of  an

anomaly in the reporting of the data.**  Therefore,  while only tentative

conclusions can be drawn,  it does  appear that Saturday return rates  are

somewhat lower than average and Sunday somewhat  higher.  This would  appear

to be  confirmed by Curry Co. personnel  at  the  recycling center who report

 that Sundays  are especially busy since for many visitors  it is  the day  they
     *To develop estimates of the time-di stri buti on of  container  returns
 the following mode" was estimated using ordinary least  squares  regression.

 (3)                Rt = St + otiSt.! + «2St-2 + •••  + anSt-n


 where    R  = returns of containers on day t,  and
         S  = sales of beverages on day t.

     The R^ statistic for the model is 0.58.  The coefficients
 (a]_, «2' ••• an) preceding the sales terms can be directly interpreted
 as  the  share ot sales for that time (i.e., day) that were returned in
 day t.

     **Specifically, for several Thursdays vended sales were reported as
 zero.

                                   16

-------
CO
cc
CO
CO
z
o
o
cc
CO
a:
                                                 A = sales   •
                                                 + = returns
°r  6   8 10  12
                                  16  18 20  22  2°! 25  28 30

                                  DRY
                             June
CO
a

-------
CO
a
cc
CO
CO

o
en
CO
ce

>-
en
a
                                        = sales
                                      +  = returns
            10  12
                                f 16  18  20 2 '  2^ 26  28 30

                                  DflY
                             Aug.
CO
a
2:
~
                                            '   '    ' f '    '   '  I
                                                 A * sales
                                                 + = returns
               V   r  I i  I  r i i  I  i I  i  i t. 1
2  f   6  8  10  12
                                   16  18 20  22 2f  26  28  30

                                  DflY  Legend:
                             Sept.
                                     weekend

                                     holiday
     Figure 2.  Daily beverage sales and returns  (Cont.)

-------
tr
cc
UJ

Q±


>-
cz
c.
             1 '  •  i  ' I  '  I '  [  ' I '  I  ' I  '  I'1 I  '  I '  f  4 I '  I  '
           2   «r   6  8  10 12  If  16  18  20 22  24  26 28  30
                             June
a:
a:
LU
cc
                   i  i  i[ jIi|iIi  r  ii  i ~iIii  iIIilI
           2  4   6   8  10  12 H  16 18 20  22 2^  26 28  30

                                 DflY    Legend:
                              July
weekend

holiday
                  Figure 3.   Daily return  rate
                               19

-------
OI
ca
•z.
C£
(XL

>-
cc
C3
5  8  10 12
                                  16  18  2'J 22  2f 26  28 30

                                  DfiY
                            Aug.
cr
o
           2   °r  6   8 10  12 If  16  18 20  22 24  26  28  30

                                  DflY     Legend:
                              Sept.
                               vnekend

                               hoiidav
             Figure 3.  Daily  return rate (Cont.)
                               20

-------
       eave the Park.  A test for a day-of-the sunnier effect indicated no signifi-

       ant trend over the simmer in return rates.


          5.2.1  Vended Sales

          At  the request of EPA Curry Co. personnel ran a special  test on vended

       ales  to determine whether return rates from vended soft drinks varied sig-

       if icant iy f rom those for nonvended beverages.  Curry Co.  personnel marked

       '"  /ended cans with a different color stamp during a one-week period,  July

       i  to July 25.  At the end of each day, 20 cans were sampled from each bag

       r  ^eturned cans.  There are approximately 400 cans per bag.   This sampling

       as  continued  one week beyond the last day of the special  marking of vended

       >ntainers.

          The expected proportions of container returns which should be represen-

       ;d by vended  sales, based on the proportion of vended to total sales,  were

       >mpared to the actual proportions found in the sample.  Based on the appl i-

       ition of standard statistical techniques, it was concluded that there is

       )  strong evidence that the return rate of vended containers differs from

       ie ^eturn rate of 69 percent for all  containers.*
           *The  expected  proportions were estimated from the time distribu-
        on of  container returns  and the vended salei data.   They were compared
       > the  actual  proportions  found in the sample and a chi-square test was
       ,ed to  test for  a  significant difference.

           This  test statistic is  computed as :
Z
                                            (observed i - expected i)2
                                                    expected
       lere "observed"  is the  proportion of  specially marked cans found in the
       mple of returned cans  taken  each day, and "expected" is the proportion
         cans we could expect  to find  in the sample if the null hypothesis is
       -Lie.  "Expected"  was  computed as a  distributed lag of past sales divi-
       •d by returns  for the  day,  where the  lag weights were those estimated
       >r beverage returns  as  a whole.  The  statistic is distributed as chi-
       juare with n-1 degrees  of freedom.


                                        21

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     5. 3  Recycling, _SoT_id Waste,  and  Litter



     In 1975 Curry Co.  established a recycling  program  "...to reduce the



waste of material  resources  and energy,  and to  reduce to  a minimum  the n<



for garbage to be  hauled to  a land-fill"  (Yosemite  Park and Curry Company



1975, p. 2).  A centrally located  Recycling Center  is maintained adjacent



to the Village Store and is  open daily during the peak  season.  Additione-



centers  are in employee housing areas.   In  1975, 95  tons  of waste materi;



were recycled including almost one ton of  aluminum,  one Ion of  steel  (bi-



metal),  two tons of tin, 11  tons of glass  ar;d SO tons of  cardboard  (Yosen



Park and Curry Company, 1975, p. 3).   Other recycled materials  include:



newspapers, copper, batteries, and tires.  As a result  of these efforts,



prior to the institution of  the deposit system, Curry Co.  had already i d<



tified markets for the materials present  in returned containers and had



developed systems for handling returned materials.



     During the 126-day test period, Curry Co.  recycled about 30 tons of



glass,  bimetal, and aluminum beverage  containers.   As  shown  in  table 2,  '



predominate material recycled was  aluminum.   Of the 30  tons,  at least 83



percent represents  containers which were returned for  the 5-cent  refund.



The  deposit system  apparently induced  "piggy  backing"  as  consumers  also



returned containers not purchased in the Park.  The returned  containers  \



bagged  and  shipped  to Fresno where they were  sold for  scrap.



     Obviously, the recycling of returned containers not  only produces  n



enue to help finance the deposit system but also  reduces  the  quantity of



solid waste which  otherwise must be collected,  transported out  of  the Par



and  properly disposed of  in  a landfill.
                                     22

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          Table 2.   Recycled beverage  containers,  simmer  1976
Pounds
With
Material deposits
Glass NA
Bimetal 7,141
Aluminum 41,943
Total
Without
deposits
NA
1,548
2,173

Total
6,661
8,689
V
44,116~
59,466
NA - not available
             _!/ Of this total  collected,  37,025 pounds  were
          allowed by the  recycling company.
          Source:  Yosemite Park  and Curry Co.

     Prior to the institution  of  the deposit  system  there were no sur-
veys of litter in Yosemite which  could  serve  as a  benchmark for  estima-
ting the impact of the  deposit system on  container littering.  However,
NPS personnel  responsible for  collecting  litter believe that fewer lit-
tered containers were collected in the  summer  of 1976 than in previous
years.   Reportedly,  refund bearing containers  were seldom found.
     5.4  Economics
     The cost of the deposit system to  a  Park  concessionaire is  estimated
by subtracting the cost of labeling,  handling, bookkeeping and other rele-
vant costs (including the time and cost of  designing the system, designing
and printing consumer information material, running special tabulations,
and meeting with and answering questions  from  EPA, RTI, the press and other
interested parties)  from  the forfeited  deposits on containers not returned
and the scrap value  received when returned  containers are recycled.   Of

                                    23

-------
special mention is the treatment  of  solid waste costs.   If  recycled

containers result in a reduction  in  solid waste cost  then a credit for

these cost savings should also be included.

     Based on a simple model  of the  costs of  a deposit  system,  presented

below and more fully discussed in A  Guide to  Implementing a Deposit-

System (Youngblood and Bingharn, 1977),  estimates of  the cost of the

system at Yosemite were calculated.   In developing the  cost estimates

presented here the approach was to first present those  costs of the

deposit systan which primarily relate to beverage sales or  container

returns.  Then various other-  costs were included which  tend to be re-

lated to the existence of the deposit system  rather  than to the volume  of

beverage sales or container returns.   To the  extent  possible the results

were generalized so that the  reader  may visualize the economics of  a

deposit systan in other situations.

     Although the values were, of course, developed  from the Yosemite

experiment, what is presented should not be  interpreted as  representing

a rigorous analysis of the Curry Co.  costs.


     5.4.1  Handling Costs

     The total handling costs  of  a deposit system include the extra ex-

penditures to:

           1) label the container,
           2) collect the deposit,
           3) return the deposit,
           4) dispose of the containers,  and
           5) keep records  of  costs and revenues.

These five categories  of expenditures in addition to the associated

labor  costs  are  discussed  below  and summarized in table 3.
                                   24

-------
                Table 3.   Container  handling costs by activity




1)

2)

3)

4)

5)


Activity

Label

Collect, deposit

Return deposi t

Dispose of containers

Account! ng
Productivity
(man hours per
100 cases)
I/
1.00
21
0.23"
21
1.86"
3/
4.87~
4/
0.12"
Labor cost
(dollars per
manhour)5

$ 3.89

3.89

3.89

3.34

4.23
Activity cost
(dollars per
100 cases)

$ 3.89

0.89

7.24
6/
16.46"

0.51
J_/  Based on Yosemite experience  with hand-stamping of  100 cases  per manhour.
2_l  From Alpha Beta Acme Markets,  Inc.
3/  From Alpha Beta Acme Markets,  Inc.  for  the following activities:  1) moving
      full rack of bottles  to storage area.   2)  clearing of  bottle storage area,
      3) sorting of bottles  from  rack,  4) moving empty  rack  to front,  and
      5) checking empties to driver.
_4/  Based on Yosemite experience  of  30 minutes daily.
5/  Based on Yosemite wages  plus  36.5 percent fringe  benefit factor.
6_/  Includes a mileage charge on  the  truck  used  for daily pickups of $0.19 per
      100 cases.
                                      25

-------
     1)  1 abel- All  containers  at  the Park were stamped by hand with a
soft sponge stamp.   The  cost  of  24 stamps  and 12 pints of frozen food
ink, which  was  chosen  because it can withstand moisture, was $267.  The
containers  were stamped  on  the  bottom  at  an  estimated rate of 100 cases
per man hour.
     2) col lect deposits -  The  salves  clerk must expend additional time
with each beverage  customer to  ring up  and collect  the deposit.  No
estimate of these costs  is  available  for  the Yosemite experiment; however,
a time and motion study  indicates  about.  0.3  seconds  are required per
container to ring up the deposit.   This  value  has  been used  here.  On  a
total  basis, this would  imply the  equivalent of one additional  employee  at
Yosemite over the 126-day test  period.   Obviously,  however,  the total  time
required to collect the  deposit is distributed over  all retail  clerks  and
is  not likely to result  in an employment  increase.
     3) return deposits  - For all  returned containers, the  cashier must
ring up the deposit being returned and  return  the  deposit  to the customer.
No  estimates of  the time or cost of this activity  have been  developed  by
Curry  Co.  However, based on  the time and motion study, the  time required
can  be as  high as 2.8 seconds per container.   This value would  imply the
equivalent of an additional 0.7 employees for  the  126-day  period.
     4) dispose  of containers - The returned containers are bagged,  stored
and, when  a truck load is  accumulated,  shipped to  Fresno where  they are
sol d for scrap.
     At Yosemite the recycling center is manned from 9 a.m.-8.p.m.   seven
days a week during the peak season.  About four  additional  manhours  are  re-
quired daily to  collect  returned containers  from  the retail  outlets  and  to

                                   26

-------
truck the recycled materials to a central  storage  area  prior  to being



shipped to Fresno for a total  of 15 manhours  daily.   Estimates  of  the



time spent at the retail  outlets are  not  available.   Assigning  the  total



of 15 manhours daily to the  deposit system results  in a productivity



rate (manhours per returned  container)  quite  similar  to the estimate



developed from a supermarket time and motion  study.



     5) accounting - The  additional bookkeeping  requirement is  informally



estimated by Curry Co.  to be 30 minutes daily or about  0.? seconds  per



container on average for  the summer season.   This  value is about  equal



that of the highest value reported in the  time and  motion study.



     6) labor costs - The cost of performing  the above  tasks  is the



product of the productivity  of the employee (manhours per container)



and the cost of the employee (dollars per  manhour).   These costs  include



not only the wages paid the  employee  but  also taxes and fringe  benefits



which include lodging and meals.  Curry Co.  estimates these costs  to



average 36.5 percent of the  wage base.   The recycling staff  is  paid



$2.45 per hour, sales clerks $2.85 and  bookkeepers  $3.10.  The  resulting



costs per 100 cases are shown in the  fourth column  of table 3.





     5.4.2 Revenue



     The primary revenues which accrue  to retailers under this  deposit



system are: 1) forfeited deposits, and  2)  sales  of  the  returned con-



tainers for recycling.   Because the NPS charges  Curry Co.  per load of



collected solid waste and because frequency of collection  has not  been



altered, no solid waste costs were avoided.
                                   27

-------
     The scrap prices  paid  to  the Curry Co. are shown in table 4.  Since n

transportation costs  were incurred  by Curry Co. the FOB and delivered sera

val ue are the same.


     5.4.3 Gross Profits

     The average profits per  container due to  the  deposit  are

(4)                              P  =  R -  C

where

       P = profits per unit of beverage sold,

       R = revenues  per unit  of beverage  sold,  and

       C = cost per  unit of beverage  sold.

     The costs can be  divided  into  those  costs  incurred on every sale

plus those incurred when a  container  is returned or:

(5)        C = (LABEL) + (COLL) + (ACC) + RR [(DISP)  + (RET) ]

where

     LABEL = cost of label ing,

     COLL  = cost of collecting deposit,

     RET   = cost of returning deposit,

     ACC   = cost of bookkeeping,

     RR    = fraction of containers returned,  and

     DISP  = cost of disposing the  returned  container.

     The revenues can be divided into the forfeited deposits  and the

scrap sales  of  returned containers:

(6)                     R = (1-RR)(D) +  (RR)(SV)

where
             D = deposi t, and

           SV =  scrap value of the container.


                                     28

-------
                    Table  4.  Container scrap values
Container
Aliminum can

Steel can (bimetal )
Nonref il 1 abl e bottl e

beer (12 oz)

soft dri nk (1 6 oz)
Wei ght
(1 b per
100 cases)
105.6

264.0


919.2

1500.0
Scrap
(dollars
per ton)
$ 300

20


20

20
value
(dollars per
100 cases)
$ 15.84

2.64


9.19

15.00
Net scrap value
(dollars per
100 cases)
I/
$ 15.74"
2/
* ~~

11
6.02"
11
11.83
     !_/ Calculated  from  transportation  cost  data provided by Curry Co.
     2/ Not computed since  nearest market  is San Francisco, an uneconomi-
cal  dTstance to ship scrap  steel  from Yosemite.

     The gross  profits  thus  depend on the  return rate and the scrap value of
the  container returned.   It is  necessary to  examine each container because
each has a unique  salvage  value.
     The resulting  gross  profit rates  (dollars  per 100 cases) for beverages
marketed in aluminum cans  and  glass  bottles  are:
       aluninun can = 114.71 -  RR(127.96),
       nonref ill able beer  bottle (12 oz) - 114.71 - RR(137.68), and
       nonrefillable soft drink bottle  (16 oz)  = 114.71 - RR(131.87).
     The above  gross profits for the three container types  at the Yosemite
return rate of  69  percent  as well  as a  set of  alternative return rates are de-
picted in table 5.   This  table  clearly  shows the inverse relationship between
the  return rate and gross  profits — as  the  return rate goes  up, profit decreases.
However, it should be pointed out that  a major  cost element is labeling.  At
Yosemite this was  done by hand  at  an estimated  cost of $3.89 per 100 cases
(table 3) or approximately $2,000 for  54,000 cases.  If containers can be
                                       29

-------

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labeled by the beverage producer,  labeling cost  could probably be  signifi-

cantly reduced.   The total  handling  costs  and  revenues  by  activity are shown

in tabl e 6.


     5.4.4  Net Profits

     The above estimated profit rates  ar£—based  on  the  inclusion of  the

major handling costs only.   In addition, Curry Co.  indicates  the existence

of other costs for both equipment  and  supplies as well  as  supervisory and

management time.   Sane of these costs  can  be  accurately identified,  however,

most must be estimated.  TaDlt 7 summarizes the  economics  of  the deposit

experiment using both the actual  return rate  '0.69)  and alternative  return

;• at es.

     Based on total  beverage sales of  54,325  cases  and the assumption that

98 percent of sales  were in aluminum cans  with the  remainder  equally divided

between nonref il 1 abl e beer and soft drink  bottles,  a gross profit  of $14,304

was made during the  first summer.*  However,  Curry  Co.  has estimated that

about $6,298 was required for equipment and supplies as well  as for  super-

vision  and management of the deposit experiment. The labor time  ($4,191)  is

an estimate of the cost of the time spent  by  Curry  Co.  supervisory and man-

agement personnel.  This time was  supplied by  the regular  Curry Co.  em-

ployees, so no actual out-of-pocket  expenses  were  incurred.   However,  since

they were devoting time to overseeing the  experiment, some other  activities

were getting  less attention than they otherwise would.   The result of sub-

tracting these costs results in an expected profit  of $8,006 for future

summers — assuming the costs, productivity, return rates, and sales volume

are the same.
     *This value differs si ightly fran the value shown in table 6
  $14,160) primarily due to rounding errors.
                                     31

-------
 Table 6.   Total  handling costs  and revenues  by activity







            Activ ity





Handling costs



   Label                                         2,113



   Collect deposit                                 483



   Return deposit                                2,714



   Dispose of containers                         6,170



   Accounting                                      277



         Subtotal                             $ 11,757





Revenues



   Forfeited deposits                           20,209



   Scrap sales



      Aluminum cans                              5,554



      Steel cans  (bimetal)                          87



      Nonrefillable beer bottle                     67



         Subtotal                             $ 25,917





Gross  profits                                 $ 14,160
                            32

-------















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     In addition,  management  time was  also expended  due  to start-up and



the experimental  nature of  the  system.   Subtraction  of  the estimated



value of this time ($6,525)  leaves a net profit  of $1,481.  There were a



few other costs which are not included here for  phone  calls,  trips to



EPA in San Francisco by Curry Co.  personnel  to discuss  the program



implementation and the cost of  a shipment  of bimetal  scrap.   If  all



these additional  items are also included,  the  deposit  system  for the



first summer would break even.
                                   34

-------
                              BIBLIOGRAPHY
Alpha Beta Acme Markets,  Inc.,  "Bottle  Survey '71."   La  Habra,
     California:  1971.

U.S. Department of the  Interior,  National  Park  Service,  Campground  Use
     in the National  Park  Service;  Camper  Days  in  Areas  Administered try
     the National Park  Service; Public  Use of the  National  Parks,
     (monthly) , and Public Use  of the National  Park  System,  (semi-
     annually).  Washington,  D.C.:  U.S.  Government Printing Office,
     1974.

U.S. Department of Interior,  National Park Service,  Yosemite National
     Park Collection  and  Analysis of Qualitative TransportatTon  Data7
     Washington,  D.C.:  U.S.  Government  Printing Office,  November  1973 .

Yosemite Park and Curry Company,  1975 Annual  Lnvironmental  Report.
     Yosemite Park, California:
Youngblood,  C.  E.,  and T.  H.  Bingham, A  Guide  to  Implementing  a  Deposit
     System.  Reseach Triangle Park, N .C . :  Research Tri angl e Insti tute,
     1977 (draft report).
                                   35

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