FPA R? 79 (IRQ
Environmental Protection Technology Series
September 1972
The Beverage Container Problem
ANALYSIS AND RECOMMENDATIONS
Office of Research and Monitoring
U.S. Environmental Protection Agency
Washington, D.C. 20460
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EPA-R2-72-059
September 1972
THE
BEVERAGE CONTAINER PROBLEM
ANALYSIS AND RECOMMENDATIONS
by
Tayler H. Bingham and Paul F. Mulligan
Research Triangle Institute
Research Triangle Park, North Carolina
Contract No. 68-03-0038
Program Element 1D2314
Project Officer
R.H. Ongerth
Solid Waste Research Laboratory
National Environmental Research Center
Cincinnati, Ohio 45268
Prepared for
OFFICE OF RESEARCH AND MONITORING
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
For sole by the Superintendent of Document*, U.S. Qorenunent Printing Office, Washington, D.C. 20402
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REVIEW NOTICE
The Solid Waste Research Laboratory of the National
Environmental Research Center, Cincinnati, U.S. Environmental
Protection Agency, has reviewed this report and approved its
publication. Approval does not signify that the contents
necessarily reflect the views and policies of this laboratory
or of the U.S. Environmental Protection Agency, nor does
mention of trade names or commercial products constitute
endorsement or recommendation for use.
The text of this report is reproduced by the National
Environmental Research Center, Cincinnati, in the form re-
ceived from the Grantee; new preliminary pages and cover
have been supplied.
Reprinted by
Office of Solid Waste Management Programs
U.S. ENVIRONMENTAL PROTECTION AGENCY
April 1973
n
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FOREWORD
Man and his environment must be protected from the'adverse
effects of pesticides, radiation, noise and other forms of pol-
lution, and the unwise management of solid waste. Efforts to
protect the environment require a focus that recognizes the
interplay between the components of our physical environment -
air, water and land. The multidisciplinary programs of the
National Environmental Research Centers provide this focus as
they engage in studies of the effects of environmental contami-
nants on man and the biosphere and in a search for ways to
prevent contamination and recycle valuable resources.
When we think of litter; when we think of public displea-
sure; when we think of citizen action programs, the empty
beverage container is high on the list. This contract study,
published by the National Environmental Research Center,
Cincinnati, was undertaken to comprehensively examine the
beverage container problem, analyze government po!1'~'!es, and
recommend an alleviating course of action. We beli j the
information found here will prove interesting and informative
to everyone concerned with solving this problem.
Andrew W. Breidenbach, Ph.D.
Director, National Environmental
Research Center, Cincinnati
iii
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ACKNOWLEDGMENT
This study of the environmental problems caused by beverage
containers was prepared by the Research Triangle Institute, Research
Triangle Park, North Carolina, pursuant to Contract No. 68-03-0038
with the Environmental Protection Agency. The statements, findings,
conclusions, and recommendations presented in this report do not
necessarily reflect the views of the Environmental Protection Agency.
The principal investigators were Paul F. Mulligan and Tayler H.
Bingham (project manager). Alex Cole and Alvin Cruze contributed
to the analysis of resource requirements and quantification of
consumer demand respectively. Raymond Collins, Dr. Michael Rulison,
and Dr. David LeSourd provided critical reviews of the study.
The authors have benefited greatly from the comments and
suggestions of the EPA Project Officer, Richard H. Ongerth. In
addition, Harry Freeman, Leander Love11, Arsen Darnay, Joel Jacknow,
Daniel Greathouse, and Haynes C. Goddard all of EPA provided critical
reviews of earlier drafts of the study. Their contributions are also
appreciated.
1v
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TABLE OF CONTENTS
Chapter Page
- — 2—
1: INTRODUCTION AND SUMMARY 1
1.1 Public Concern Over Beverage Containers 1
1.2 Approach 2
1.3 Summary of Findings 3
2: RATIONALE OF A BEVERAGE CONTAINER POLICY 7
2.1 Introduction 7
2.2 Conservation of Resources 7
2.2.1 Trends in Containerization and Consumption 7
2.2.2 Resource Implications for Glass 10
2.2.3 Resource Implications for Steel 11
2.2.4 Resource Implications for Aluminum 12
2.2.5 Energy 14
2.3 Solid Waste 17
2.3.1 The Volume, Composition, and Cost of Solid
Waste 17
2.3.2 The Beverage Container in Solid Waste 20
2.3.3 Conclusion 24
2.4 Litter 24
2.4.1 The Volume and Composition of Litter 25
2.4.2 The Beverage Container Share of Litter 29
2.4.3 Conclusion 34
3: METHODS OF EVALUATING ALTERNATIVE GOVERNMENTAL POLICIES .... 36
3.1 Introduction 36
3.2 Restrictions 36
3.3 Incentives 36
3.4 Indirect Influence 37
3.5 Methodology for Analyzing Specific Alternatives 37
i
3.5.1 Predictability 37
3.5.2 Benefits 40
3.5.3 Costs 42
3.5.4 Equity 45
3.5.5 Administration 45
3.5.6 Type of Mechanism 45
3.5.7 Type of Approach 45
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Chapter Page
A: ANALYSIS OF ALTERNATIVE GOVERNMENTAL POLICIES FOR RESOLVING
THE BEVERAGE CONTAINER PROBLEM 46
4.1 Introduction 46
4.2 Analysis of the Major Alternatives 46
4.2.1 Proposal 1: No New Legislation 46
4.2.2 Proposal 2: Ban Nonrefillables (Restriction) ... 47
4.2.3 Proposal 3: Ban Specific Materials
(Restriction) 47
4.2.4 Proposal 4: Require Specific Materials
(Restriction) 48
4.2.5 Proposal 5: Reguire Mandatory Deposits
(incentive) 48
4.2.6 Proposal 6: Tax (Incentive) 64
4.2.7 Proposal 7: Subsidies (Incentive) 77
4.2.8 Proposal 8: Educational Campaign
(Indirect Influence) 78
4.2.9 Proposal 9: Enforcing Present Litter Laws
(Indirect Influence) 79
4.2.10 Proposal 10: Research and Development
(Indirect Influence) 79
5: RECOMMENDATION FOR A GOVERNMENTAL POLICY 81
5.1 Introduction 81
5.2 Evaluation of a Mandatory High Deposit and a Low Tax ... 82
5.2.1 Predictability 82
5.2.2 Benefits 82
5.2.3 Costs 83
5.2.4 Equity 84
5.2.5 Administration 84
5.2.6 Type of Mechanism 85
5.2.7 Type of Approach 85
5.2.8 Summary 85
5.3 Recommendations for Governmental Policy 85
5.4 Recommendations for Further Research 86
6: REFERENCES 87
7: BIBLIOGRAPHY 90
Appendixes
A: PENDING LEGISLATION 101
B: BEVERAGE CONSUMPTION AND CONTAINERIZATION TRENDS 121
C: TECHNOLOGY TRENDS IN BEVERAGE CONTAINERS AND RECYCLING 141
vi
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Appendi xes Page
D: RESOURCE REQUIREMENTS OF MAJOR CONSUMER EXPENDITURES 153
E: ELASTICITY OF DEMAND 167
F: EMPLOYMENT AND INCOME MODELS 171
vii
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LIST OF FIGURES
Figure Page
1. Beer container market share 8
2. Soft drink container market share 8
3. Beverage containerization 9
4. Beverage container production 9
5. Average number of beer and soft drink fillings per container
manufactured 10
6. Consumer survey of returnable-bottle attitudes 50
B-l. Soft drink consumption 123
B-2. Growth of soft drink consumption, population and income 125
B-3. Sources of soft drink consumption growth 128
B-4. Average soft drink consumption per capita 129
B-5. Market shares: soft drink containerization 130
B-6. Soft drink containerization trends (packaged) 131
B-7. Beer consumption 133
B-8. Growth of beer consumption, population, and income 135
B-9. Sources of beer consumption growth 136
B-10. Average beer consumption per capita 136
B-ll. Market shares: beer containerization 138
B-l2. Beer containerization trends (package) 139
viii
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LIST OF TABLES
Table Page
1. Estimated Raw Materials Used to Produce Glass and Glass
Beverage Containers, 1969 11
2. Estimated Raw Materials Used to Produce Steel and Steel
Beverage Containers, 1969 12
3. Estimated Raw Materials Used to Produce Aluminum and Aluminum
Beverage Containers. 1969 13
4. Summary of the Estimated Materials Used to Produce Beverage
Containers, 1969 14
5. Natural Resource Requirements of Consumer Expenditures for
Foods and Soft Drinks 16
6. Average Daily Solid Waste Collection, 1968 19
7. Composition of Municipal Refuse, 1966-68 20
8. Estimated Disposition of Metal and Glass Containers in Solid
Waste, 1969 21
9, Projected Disposition of Metal and Glass Containers in Solid
Waste, 1976 23
10. Distribution and Estimated Number of Items of Roadside Litter
Annually, 1969 26
11. Distribution of Roadside Litter 27
12. The Keep America Beautiful National Litter Index and the
Cost of Litter Collection on State Highways 28
13. Distribution of the Beverage Container Element of Roadside
Litter 30
14. Distribution and Estimated Number of Littered Beverage
Containers, 1969 31
15. Annual Rate of Littering of Beverage Containers, 1969 32
16. Projection of Littered Beverage Containers, 1976 33
17. Average Beverage Prices for Single Drink Containers by
Container Type 38
IX
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Table Page
18. Regional Containerization Patterns 50
19. Price Impacts Estimated With a Mandatory High Deposit (10 cents)
on Beverage Containers 51
20. Consumption and Containerization Impacts Estimated With a
Mandatory High Deposit (10 cents) on Beverage Containers. . . 55
21. Cost of Convenience Impacts Estimated With Mandatory High
Deposit (10 cents) on Beverage Containers 58
22. Employment Impacts Estimated With a Mandatory High Deposit
(10 cents) on Beverage Containers 59
23. Investment Impacts Estimated With a Mandatory High Deposit
(10 cents) on Beverage Containers 60
24. Beer Excise Tax Impacts Estimated With a Mandatory High
Deposit (10 Cents) on Beverage Containers 61
25. Personal Income Impacts Estimated With a Mandatory High
Deposit (10 cents) on Beverage Containers 62
26. Littered Beverage Container Collection Costs on a Unit
Basis, 1969 65
27. Price Impacts Estimated With a Tax on Beverage Containers ... 66
28. Consumption and Containerization Impacts Estimated With a
Tax on Beverage Containers 68
29. Cost of Convenience Impacts Estimated With a Tax on Beverage
Containers 72
30. Employment Impacts Estimated With a High Tax (5 cents) on
Beverage Containers 73
31. Investment Impacts Estimated With High Tax (5 cents) on
Beverage Containers 74
32. Beer Excise Tax Impacts Estimated With a High Tax (5 cents)
on Beverage Containers 74
33. Personal Income Impacts Estimated With a High Tax (5 cents)
on Beverage Containers 75
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Table Page
A-l. Summary of Legislation for Controlling Beverage Containers,
1969-71, by Categories 101
A-2. Pending Legislation: Selected State and Federal Laws Proposed
as of June 1971 103
B-l. Summary of Beverage Consumption and Containerization
Trends 122
B-2. Projections of Soft Drink Consumption 124
B-3. Distribution of Soft Drinks, 1970 127
B-4. Soft Drink Containerization Projections, 1976 132
B-5. Projections of Beer Consumption 134
B-6. Beer Containerization, 1976 140
C-1. Cost of Glass Beverage Containers to the Bottler, 1970 142
C-2. Glass Production and External Gullet Consumption, 1967 146
D-l. Natural Resource Requirements for Major Personal Consumption
Expenditures 157
F-l. Employment in the Bottled and Canned Soft Drink Industry. . . . 173
F-2. Soft Drink Distribution Labor Requirements by Type of
Container 173
F-3. Soft Drink Distribution Employment 174
F-4. Employment in the Malt Liquor Industry 175
F-5. Beer Distribution Employment, 1976 176
F-6. Employment in Wholesale Distribution of Beer 177
F-7. Employment in the Glass'Container Industry 179
F-8. Selected Data on the Glass Container Industry 179
F-9. Selected Data on the Metal Can Industry 180
F-10. Metal Can Employment 181
x1
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Table Page
F-ll. Man-hours per Refillable Bottle for Nine Categories of Labor
Costs 183
F-12. Projected Percentage Distribution of Industry Employment by
Occupation, 1975 186
F-13. Average Hourly Earnings of Production Workers in the Beverage
and Beverage Container Industries, 1969 187
F-14. Estimated Average Annual Earnings for All Employees in the
Beverage and Beverage Container Industries, 1969 188
F-15. Employment and Earnings in Selected Industries in 1969 Under
Different Container Systems 189
xii
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AN ANALYSIS OF THE BEVERAGE CONTAINER PROBLEM
WITH RECOMMENDATIONS FOR GOVERNMENTAL POLICY
Chapter 7: INTRODUCTION AND SUMMARY
1.1 Public Concern Over Beverage Containers
Many individuals and groups in the United States today consider
beer and soft drink containers to be a significant environmental
problem. The many legislative proposals pending in, and laws already
enacted by, Congress and State legislatures, and proposed and enacted
ordinances by localities to control the use or disposal of these bottles
and cans are evidence of public concern. Another indication of this
concern is the voluntary cleanup campaigns of individuals and groups.
A review of the proposed legislation affecting beverage containers
shows that over 350 bills have been introduced in Congress, in State
legislatures, and to local jurisdictions. These proposals include
provisions to prohibit some types of containers, require deposits on
others, tax all containers, or establish study committees to deal with
beverage containers.* Several of the bills introduced in the Congress
have been the subject of hearings before both House and Senate
subcommittees.
The intended purposes of the proposed legislation are: to reduce
the number of littered beverage containers, to reduce the burden placed
on solid waste collection and disposal by discarded beverage containers,
and/or to conserve the natural resources devoted to making beverage
contai ners.
The first law restricting beverage containers was passed by the
State of Vermont in 1953. It' banned nonrefi11ablet beer bottles in an
effort to reduce their littering. More recently the State of Oregon
and City of Bowie, Maryland, have both passed laws which require
deposits on all beverage containers.
*See Appendix A for a listing of the pending legislation.
tThe terms "nonrefillable" and "nonreturnable" in this report refer
to "no deposit-no return", "one-way" bottles that are designed for a
single sale.
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The Vermont Law expired in 1957 and was not renewed because the
volume of litter was unaffected. Both the Oregon and Bowie laws are
being challenged in the courts. The results are being anxiously
awaited by many other States and localities currently considering some
action on the beverage container.
A recent study for the Environmental Protection Agency (EPA)
described some of the major voluntary cleanup campaigns, noting that
such campaigns have been occurring with greater frequency due to the
current wave of environmental concern. These campaigns have ranged in
size from large efforts (e.g.. the Keep America Beautiful Day) when more
than two million people picked up litter along 200,000 miles of highways
and streams and from 400,000 acres of public recreation areas, to small,
local efforts by Scouts or neighbors. These campaigns, according to the
study, have a current estimated annual value of about $100 million,
valuing the donated labor and truck time at rates reflective of the
2
average costs typically incurred by municipalities to collect litter.
These legislative initiatives and voluntary efforts bear witness to
a significant level of public concern about the problem of beverage
containers. The exact rationale for government* action, however, is not
as obvious.
1.2 Approach
The purpose of this study is to provide a comprehensive examination
of the beverage container problem, an analysis of alternative
governmental policies, and recommendations as to the best course of
action for EPA to take to alleviate this problem.
In order to develop a workable definition of the beverage container
problem, we have examined the nature of beverage containers, including
their materials composition, distribution systems, and the consumer
behavior associated with the disposition of the empty container. As
documented in this report, beverage containers are primarily a problem
because they are a large and very visible share of litter. Several
*The terms "government" or "governmental" unless otherwise
modified mean the Federal, State, or local government.
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alternative approaches were examined that might discourage the littering
of beverage containers and/or provide a basis for coping with the
littered container. Finally, recommendations as to the best course of
action for EPA to follow on this problem are presented.
The definition of beverage container used in this study is a
bottle or can customarily used to package beer or soft drinks for
retail sale. These containers are frequently littered and, as such,
often are the object of public concern. Therefore, it is justified to
analyze them separately from other elements in solid waste.
Like any study, this one has limitations. One drawback is that the
approach is from a national perspective and, therefore, does not
explicitly treat the regional variations in beverage consumption and
containerization. Another limitation is the lack of quantitative data
on many important factors and the uncertainty associated with the
expected shifts in beverage containerization as a result of each policy
considered. In many cases, where we would have preferred to use
quantitative relationships, we were unable to due to lack of data. In
these cases we have used, and documented, our judgment.
We believe that despite these limitations, this study, cautiously
interpreted, can provide a useful basis for informed decisionmaking by
EPA on the problem of beverage containers.
1.3 Summary of Findings
This study includes two principle elements:
(a) the analyses of three types of environmental concern that
might be cited as the rationale for a beverage container
policy, and
(b) the analyses and evaluation of alternative governmental
policies for beverage containers, and resulting
recommendations.
There is substantial public concern over beverage containers. The
proper basis for a government policy on beverage containers, however,
must be determined within the overall context of environmental problems
of which the beverage container problem is just one. Three types of
environmental dimensions to beverage containers were examined as
possible bases for government action. These were:
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(a) the resource dimensions to beverage container production,
especially nonrefiliable containers,
(b) the solid waste dimensions of discarded beverage containers,
and
(c) the amenities dimensions of littered beverage containers.
We conclude that beverage containers are an environmental problem
primarily because some consumers of beverages litter their empty
containers rather than disposing of them properly. This creates social
costs. To a lesser extent, beverage containers are a problem because
they are a growing portion of the increasing amounts of solid waste
that must be suitably collected and disposed of each year.
There are several reasons why beverage containers are not
considered a resource problem. First, they constitute a relatively
small use of steel and aluminum, about 2.0 and 5.6 percent respectively
of 1969 national production of these materials. They also accounted
for about 44.9 percent of all container glass production. All three
materials have resource inputs which are fairly plentiful. Second,
although it does appear that we would save some energy that is produced
from our natural resources if we could shift back to a refillables-only
system, the savings would not be significant as a percent of total
national consumption. Even more importantly, to allocate resources on
the basis of energy requirements alone ignores the utility that
consumers may derive from the convenience of nonrefillable containers.
The resource dimensions of beverage containers, therefore, have not been
used to define the beverage container problem.
We estimate that discarded beer and soft drink containers
represented about 3.6 percent of the weight of residential and commercial
solid waste in 1969. Their share is probably increasing due to the rapid
growth in beverage container!" ration and the shifts to nonrefi liable
bottles and cans. There is no satisfactory way, given current data, to
estimate the impact of a small component of solid waste on total
collection and disposal costs. However, when we allocate costs on a
percent of weight basis, we see that the beverage container would have
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accounted for $93.3 million in 1969. Fractional reduction in the
number of containers in solid waste would not have a significant
impact on collection and disposal costs, unless these reductions were
combined with reductions of other solid waste elements. For this
reason, we do not believe that the beverage container contribution
to solid waste should be the primary rationale for government
intervention.
Beverage containers represent an important share of litter. On a
national basis they probably make up at least 20 percent of the items
littered along our roadsides and, because of their lack of
degradability, at least 30 percent of the items typically collected.
Since they are highly visible and remain so over a long period of time,
their importance probably is understated when using a unit-count-
measurement basis. Because of the increases in beverage consumption
and shifts in containerization, the number of littered beverage
containers may well increase at a rate close to 8 percent annually in
the years ahead. It is the contribution of beverage containers to
litter, that makes them the subject of special policy consideration.
On a share-of-littered-iterns basis, the public spent a minimum of
$43 million in 1969 to collect littered beverage containers—almost 2
cents per littered container. If the countryside were made as litter-
free as most would like it, the required more frequent litter collections
would substantially raise the collection cost per container.
Littered beverage containers result in more than an economic cost,
they also result in an unmeasurable esthetic cost. To some extent,
all members of society have their quality af life reduced in a littered
environment.
In order to make an informed decision about the most appropriate
policy for resolving the beverage container problem, a common set of
criteria was needed. The following criteria were suggested by EPA:
(a) The policy has predictable impacts on beverage prices,
consumption, and containerization;
(b) The policy produces benefits in litter and solid waste
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reductions exceeding the costs in terms of prices,
convenience, employment, investment, tax revenues,
and personal income;
(c) The policy is equitable, by making those who litter
beverage containers bear the social costs of the littered
containers;
(d) The policy is easy to administer;
(e) The policy uses a market-type mechanism;
(f) The policy is broadly applicable to other elements in
solid waste.
We examined 10 specific policies falling within the three broad
approaches of (a) restrictions, (b) incentives, and (c) use of indirect
influence.
We conclude that either a mandatory high deposit or a low tax,
with the revenues being used for more frequent litter collections, could
provide significant environmental benefits by reducing the number of
visible littered containers. However, we favor the tax over the deposit
as the most appropriate governmental policy because it is more
predictable, less costly to consumers and producers, and easier to
administer. The tax should reflect the average social costs of littered
containers—perhaps 0.5 to 1.0 cent per container. It should be applied
on a State level, using the administrative procedures already existing
for the collection of beer excise taxes. The revenues from a 0.5-cent
tax would have been an estimated $219 million nationally in 1969.
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Chapter 2: RATIONALE OF A BEVERAGE CONTAINER POLICY
2.1 Introduction
The substantial public concern over the disposal of beverage
containers may justify some action, but the proper basis for government
policy must be determined within the overall context of environmental
problems. The questions, therefore, are: What, if any, are the
particular characteristics of beverage containers that justify singling
them out from the many other components of solid waste? Are special
regulations governing their production or use justified?
There are three types of environmental concern that might be cited
as the bases for beverage container controls:
(a) Scarce resources must be conserved by eliminating
unnecessary or excessive uses;
(b) The volume of solid waste is so great that efforts
should be taken to reduce the amount being discarded;
(c) Littering is destructive of environmental amenities
and the beverage container is an important part of litter.
This chapter provides an evaluation of each of these as a basis
for a government policy on beverage containers.
2.2 Conservation of Resources^
Beverage containers are frequently cited as representing a wasteful
use of resources. It is argued that the trend toward increased use of
refillable bottles and cans is increasing the demand for steel and
glass without providing a proportionate increase in utility over that
provided by refill able containers. Evaluation of this argument requires
an examination of: the extent to which nonrefillables are being used,
the impact on resource availability of the various types of containers,
and the broader implications of a product-by-product approach to resource
conservation.
2.2.1 Trends in Containerization and Consumption
In 1955, 37 percent of all the beer and 2 percent of all soft drink
fillings* were in nonrefill able containers. By 1969, the amounts had
*Fillings are the number of units of beverages sold. They differ
from containerization for refill able bottles since these containers are
each used several times.
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risen to 68 and 38 percent, respectively. Assuming that current trends
will continue, 80 percent of the beer and 70 percent of the soft drink
fillings will be in nonrefillable containers by 1976 (Figures 1 and 2).*
fe
5
100
90
BO
70
60
50
40
30
20
10
•v/
HISTORICAL
NONREFILLABLE .••''
BOTTLES
CANS,
PROJECTED
Ol_L
I I I I I I I I
55 56 58 60 62 64 66 68 7O 72 74 76
YEAR
100
90
80
70
fe
50
K
5 40
I
30
20
10
I REFILL ABLE
\BOTTLES
HISTORICAL
PROJECTED
NONFILLABLE .
BOTTLES
I I I I
5556 58 60 62 64 66 68 70 72 74 76
YEAR
Figure 1. Beer container market Figure 2. Soft drink container
share. market share.
(Historical data from: Glass Containers Manufacturers Institute,
and the Can Manufacturers Institute; projections by Research
Triangle Institute—see Appendix B).
*See Appendix B for.the development of these trends.
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Based on the trends in beverage consumption, we project beverage
containerization by 1976 to total about 101 billion fillings annually
(see Figure 3); we project beverage container production to be about
77 billion then, compared to 46.9 billion containers in 1969 (Figure 4).
The growth in containerization has been, and is expected to continue to
be, more rapid than the growth in beverage consumption due to the
decline in the market share of refill able containers. As a result,
the ratio of beer and soft drink fillings to all containers manufactured
continues to decline (Figure 5).*
Figure 3.
Beverage
containerization.
Figure 4.
Beverage container
production.
(Historical data from: Glass Containers Manufacturers Institute,
and the Can Manufacturers Institute; projections by the Research
Triangle Institute—see Appendix B).
*See Appendix B for the discussion of the development of these
trends.
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4.5
4.0
3.5
(E
Ul
I 3.0
2.5
2.0
1.5
1.0
PROJECTED
I
j I
I
I
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
YEAR
Figure 5. Average number of beer and soft drink fillings per
container manufactured (Source: Research Triangle
Institute).
The figures and trends cited above are based on a national average.
There are significant regional variations in beverage consumption and
containerization with the more affluent, urbanized areas of the nation
leading the trend toward an all nonrefi11 able-container system.
2.2.2 Resource Implications for Glass
Table 1 shows the primary raw materials inputs in the production
of glass beverage containers. Glass is made from sand (silica), soda
ash, lime or limestone, and cullet (crushed glass). Silica is the most
abundant constituent of the earth's crust, and its supply is practically
inexhaustable.
Soda ash, the other main constituent of glass, is produced from a
naturally occurring mineral (trona), complex brines, or through chemical
processing of sodium. Trona is primarily found in Wyoming; the
principal sources of the complex brines are Lake Owens and Searles Lake
in California. Most of the soda ash is produced by the Solvay or
10
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Table 1. ESTIMATED RAW MATERIALS USED TO PRODUCE
GLASS AND GLASS BEVERAGE CONTAINERS, 1969
Amounts used to
Amounts used to glass beverage
produce all glass containers
Material (thousand tons) (thousand tons)
Sand (silica)
Soda ash (Na2C03)
Other (limestone,
feldspar, etc.)
Cullet
10,520
2,893
4,208
132
4,726
1,300
1,890
59
Source: Inputs based on material adapted from Midwest Research
Institute, Economic Study of Salvage Markets for Commodities Entering
the Solid Waste Stream, Fig. 7.1, p. 7-12, December 1970; total glass
production and glass beverage container production from Glass Containers
Manufacturers Institute, Inc., Glass Containers, 1970.
ammonia soda process in plants near salt supplies. Supplies of both
soda ash and limestone appear ample for all foreseeable uses. Gullet
(recycled glass) is also readily available, through inplant generation
and from scrap glass dealers.
2.2.3 Resource Implications for Steel
Table 2 shows the primary raw materials inputs in the production of
steel beverage containers. The United States currently consumes 24
percent of the world's primary supply of steel, and produces 13 percent
of the total.4
The iron content of the earth's crust is 5.6 percent, but only a
fraction of this is concentrated in commercial deposits. There are an
estimated 280,365 million tons of commercially exploitable iron ore
reserves and 585,549 million tons of potential world reserves. It is
significant, however, that known world reserves increased threefold
between 1954 and 1969. These deposits are sufficient to last hundreds
of years at the present rate of consumption.
Coal for heat energy is a major requirement in the production of
steel. The U.S. and world reserves of coal indicate that the
supply of coal should pose no problems for steel production. It is
11
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Table 2. ESTIMATED RAW MATERIALS USED TO PRODUCE
STEEL AND STEEL BEVERAGE CONTAINERS, 1969
Amounts used to Amounts used to
produce all produce steel
steel (thousand beverage containers
Materials tons) (thousand tons)
Crude and concentrated
iron ore
Coal
Lime, limestone, fluorspar,
and other fluxes
Iron and steel scrap
Pig iron
Refractories clay and
none! ay
Nonferrous metals, alloys
and ferroalloys
Sulfuric acid (100% H?SO.)
Oxygen*
159,630
103,290
32,865
30,518
11,738
4,695
2,348
1,174 ,
160,569,000,000 ft*3
3,210
2,075
660
615
235
95
45
25 3
3,225,000,000 ft0
Source: Inputs based on material adapted from Bureau of the
Census, 1967 Census of Manufactures, Industry Series, U.S. Department
of Commerce, Washington, September 1969; total steel production from
Annual Survey of Manufactures, 1969; steel beverage container
production from Can Manufacturers Institute, Inc., Annual Report:
Metal Can Shipments, 1969.
*0xygen is measured in cubic feet.
estimated that world coal consumption for all purposes will be 2.0-3.5
million tons in the year 2000. There are an estimated 5 billion tons
of coal reserves which should be extractable under current economic
conditions.
2.2.4 Resource Implications for Aluminum
Table 3 shows the primary raw materials inputs in the production
of aluminum beverage containers. Aluminum is the most abundant metallic
element in the earth's crust; its supply, for practical purposes, is
limited only by demand. Current economic and technological conditions,
however, essentially limit the commercial raw material to bauxite.
Approximately 4 tons of bauxite are required to produce 1 ton of
metallic aluminum. Bauxite is plentiful, although principal deposits
12
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Table 3. ESTIMATED RAW MATERIALS USED TO PRODUCE ALUMINUM
AND ALUMINUM BEVERAGE CONTAINERS, 1969
Amounts used to Amounts used to
produce all produce beverage
aluminum containers
Material (thousand tons) (thousand tons)
Alumina 104,992.0 436.2
Cryolite 1,088.0 4.5
Aluminum fluoride 1,904.0 7.9
Fluorspar 163.2 0.7
Anode carbon 27,200.0 113.0
Cathode carbon 1,088.0 4.5
Electricity, a.c. 816,000,000 kW-h 3,390,000 kW-h
Source: Inputs based on material adapted from Mineral Facts
and Problems, 1970, U.S. Department of the Interior, Bureau of Mines,
Washington, D.C., p. 445; total aluminum production from Annual
Survey of Manufactures, 1969; aluminum beverage container production
from Can Manufacturers Institute, Inc., Ajinual Report: Metal Can
Shipments, 1969.
are in tropical areas away from the main aluminum producing and
consuming areas of the world. Known world reserves of bauxite (6.5
billion tons) would produce approximately 1.6 billion tons of aluminum,
145 times present annual world consumption. Potential world reserves,
which are deposits that are only partially explored or are marginal or
submarginal under existing technology and economics, would produce an
estimated 9.6 billion additional tons. Other potential sources of
aluminum include ferruginous bauxite, bauxitic clay, kaolin and other
aluminum-rich clays, anorthsite, the kyanite group of minerals,
laterites, and shales. The clays, which are in large supply in the
United States, could be firmly .established as a basic aluminum source
before the year 2000.9 The supplies of materials that are required to
produce aluminum apparently pose no serious problems.
In summary, as shown in Table 4, 5,908,000 tons of glass, 1,886,000
tons of steel, and 226,000 tons of aluminum were required to produce
beverage containers in 1969. This amounted to 44.9, 2.0, and 5.6
percent, respectively of the total container glass, steel, and aluminum
13
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Table 4. SUMMARY OF THE ESTIMATED MATERIALS USED
TO PRODUCE BEVERAGE CONTAINERS, 1969
Type of
material
Glass
Steel
Aluminum
Total U.S.
production of
material
(thousand tons)
13,150
93,900
4,020
U.S. production
of beverage
containers
(thousand tons)
5,908
1,886
226
Percent of U.S.
production used
for beverage
containers
44.9
2.0
5.6
Source: Can Manufacturers Institute, Inc., Annual Report: Metal
Can Shipments. 1969; Glass Containers Manufactures Institute, Inc.,
Glass Containers, 1970; Bureau of Mines, Minerals Yearbook, 1970.
produced that year. Some of the technological trends in beverage
containerization which may affect the resource requirements are
discussed in Appendix C.
2.2.5 Energy
In addition to the materials required to produce beverage
containers, energy is required to transform these materials into the
required shapes.
In a recent study the energy requirements of the current beverage
container systems were estimated at 0.34 percent of the total U.S.
energy demand. The study also showed, however, that most of the
energy consumed for manufacturing the containers, and packaging and
distributing the beverages in the beer and soft drink industries is for
manufacturing the container since the nonrefill able container requires
several times as much energy to deliver a unit of the beverage to the
consumer as does the system which uses a refillable container. The
energy requirements of the beverage industry therefore could be
substantially reduced, perhaps by 55 percent, if the industry converted
entirely to refill able containers. This would reduce the beverage
container's share of total U.S. energy demand to about 0.19 percent.
An attempt to conserve resources by reducing beverage container
production would not be complete nor identify net impacts on resources.
This is because it does not take into account the possibility that
14
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consumers may spend less for beverages if they were all packaged in
refillable bottles or if their prices were lower than for nonrefillable
bottles and cans, and the likelihood that the consumer would then
purchase other products whose energy requirements are unknown. A more
complete approach to energy conservation would be to consider the energy
requirements of all products. Under such an approach the beverage
container may not get a high priority,
Although we have not made any intensive comparison of the resource
requirements of other consumer products vis-a-vis those of beverages,
some insight can be obtained using input-output analysis. This
analytical technique provides a method of determining the interdependence
among the industries or sectors of an economy. Based on the latest
national input-output table, which was developed using the
interrelationships existing in 1963, we have tabulated the resource
requirements of the 83 major consumer expenditure categories used by
the U.S. Department of Commerce. These relationships are expressed in
dollars of resource (e.g., coal) per dollar of demand for the consumer
expenditure (e.g., food). The complete tabulation is shown in Appendix D.
In Table 5 we have extracted the resource requirements for Food
Purchased for Off-Premise Consumption (the major food category) and for
Bottled and Canned Soft Drinks, the only beverage for which adequate
detail is available in the input-output table.*
Soft drink purchases represent about 3.2 percent of consumer
expenditures for Food Purchased for Off-Premise Consumption (beer is
12
3.6 percent) and appear to have only a slightly different resource
requirement than those for the larger food category of which they are
a part. However, this was in 1963 when about 98 percent of soft drink
fillings were in refillable bottles rather than 62 percent in 1969.
Therefore, the resource requirements for soft drinks may have increased
somewhat since 1963. All consumer expenditures, however, require
natural resource and energy inputs. Many require more than beverages
both in proportion of their total input and in absolute amounts.
A policy based on energy conservation alone would ignore the value
*Beer is included with all alcoholic beverages.
15
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Table 5. NATURAL RESOURCE REQUIREMENTS FOR CONSUMER
EXPENDITURES FOR FOODS AND SOFT DRINKS
Industry
Iron and ferroalloy ores mining
Nonferrous metal ores mining
Coal mining
Crude petroleum and natural gas
Stone & clay mining and quarrying
Chemical & fertilizer mineral
mi ni ng
Electric, gas, water, and
sanitary services
Food
purchased
for
off -premise
consumption*
(dollars)
0.00097
0.00059
0.00230
0.01295
0.00163
0.00107
0.02580
Bottled
and canned
soft drinks*
(dollars)
0.00212
0.00091
0.00273
0.01095
0.00256
0.00121
0.02632
Source: Survey of Current Business, Vol. 49, No. 11 (November
1969) and Vol. 51, No. 1 (January 1971); Input-Output Structure of
the U.S. Economy, 1963, Vol. 3., U.S. Department of Commerce.
*Each entry represents the dollar output required, directly
and indirectly, from the industry named at the beginning of the row,
for each dollar of consumer purchases of the group of products or
product named at the head of the column.
a beverage purchaser may place on convenience. Purchasing habits
indicate that convenience is currently quite important to consumers
as indicated by the average price premiums of about 1 and 2 cents,
respectively, for beer and soft drinks in nonrefillable bottles. In
1969, consumers spent about $598 million for the convenience of not
having to return empty bottles. The amount may be significantly higher
if forfeited deposits are included. If one assumes that the market
mechanism works reasonably well, that there is effective competition,
then it may be possible to state with considerable assurance that
consumers are getting what they want. However, this argument
assumes that the consumer has a choice of beverage containers. This
assumption is not completely warranted since 80 percent of beer
fillings and all the house brand* soft drinks marketed by supermarket
*House brand soft drinks are those sold under the retailer's name.
16
-------
chains are sold only in nonrefillable containers. However, the consumer
still has the choice of containers for many brand name soft drinks,
but trends show he is losing it. He once had the choice for beer and
lost it.
It does not appear reasonable to describe the beverage container
problem as a problem of natural resource or energy utilization. It is
a small user of these resources both absolutely and when compared to
other consumer items. This is not meant to imply, however, that natural
resources and energy are not being consumed too rapidly. They may be;
however, a more complete approach would be to examine the present and
future demand and supply conditions for our resources and then
establish a policy regarding their overall rate of use rather than
controlling one product class.
2.3 Solid Waste
The collection and disposal of the millions of tons of solid waste
generated each year has created serious problems for municipal
governments in finding adequate disposal sites and meeting the rising
costs of solid waste management. Beverage containers, as a share of
solid waste, contribute to the growing volume, the associated problems
of costs, and the scarcity of suitable disposal sites. The quantity
of beverage containers going into solid waste disposal is not precisely
determinable, either by volume or weight. Estimates have been made,
however, on the basis of limited sample data and the known rate of
container production.
2.3.1 The Volume, Composition, and Cost of Solid Waste
In 1968, the year for which the most complete survey data is
available, an estimated 7.5 billion tons of all types of solid waste
were generated from all sources. This includes approximately 2 billion
tons of rock and overburden generated by strip mining; 2 billion tons
of sediment washed annually into streams as a result of agriculture;
2 billion tons of agricultural waste; 1.1 billion additional tons of
mineral waste; and 360 million tons of residential, commercial, and
industrial waste.
The residential, commercial, and industrial wastes have received
17
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the most attention since they are typically generated in highly
populated areas where collection and disposal cause serious problems
for municipal governments. About 170 million tons of these wastes
were self-collected and disposed of, leaving about 190 million tons
that were collected and disposed of by public and private collection
agencies, or an average of about 5.32 pounds per person per day.
Table 6 shows the national distribution of the 5.32 pounds by
source for rural and urban areas. Differences in income and styles of
living between the urban and rural population presumably account for
the differences in the amounts of collected household solid wastes.
Household sources account for about 57 percent of the total; commercial
sources, 19 percent; and industrial sources, 11 percent. The remaining
13 percent are from demolition, construction, street and alley refuse,
and miscellaneous sources.
The first three categories in Table 6 may be combined as
residential and commercial solid waste. This portion of collected
solid waste is a better basis for evaluating the impact of beverage
containers than total solid waste, since the collected beverage
containers are probably in this portion, and it is the one that is of
most concern to municipalities and the public.
Residential and commercial solid waste amounted to 4.15 pounds
per capita per day in 1968 or approximately 78 percent of total
collected solid waste. If the per capita figure is increasing at 4
percent annually and the population in 1969 was 200 million, then the
total residential and commercial solid waste was 4.32 pounds daily per
capita or 157.7 million tons. A continued rate of growth of 4 percent
to 1976 would result in 5.68 pounds daily per capita or 228 million
tons yearly with a population of 220 million.
Separate estimates of collection costs are not available for the
residential and commercial portions of solid waste. However, if we
assume that cost is proportional to the manpower inputs, and that
70 percent of total solid waste manpower was employed for commercial
and residential solid waste, the estimated cost of collection and
18
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Table 6. AVERAGE DAILY SOLID WASTE COLLECTION, 1968
Collections injounds
Sources of
solid waste
Household
Commercial
Combined (residential
& commercial)
Industrial
Demolition, construction
Street and alley
Miscellaneous
Total
Urban
1.26
0.46
2.63
0.65
0.23
0.11
0.38
5.72
Rural
0.72
0.11
2.60
0.37
0.02
0.03
0.08
3.93
Source: R. J. Black et al , 1968 National Survey
Solid Waste Practices: An
Interim Report,
Department
per capita
National
average
1.14
0.38
2.63
0.59
0.18
0.09
0.31
5.32
of Community
of Health,
Education, and Welfare, 1968, p. 13.
disposal of commercial and residential solid waste was $2.55 billion in
1969, or $16 per ton. The collection cost was an estimated 79 percent
of the total or $13 per ton and the disposal cost was 21 percent or
$3 per ton.*
The composition of municipal refuse varies from place to place
depending upon regulations, the type of materials that are collectable,
the season, the level and distribution of commercial and industrial
activity, and the pattern of residential consumption. Although there
have been several studies of refuse composition during the last few
years, comparing the results is difficult due to the different
classification schemes used and the varied reasons for the studies (to
design incinerators, compost plants, sanitary landfills, or other
methods of disposal). Nevertheless, several patterns of waste
composition are discernable. In most studies, paper products are the
*The $2.55 billion is 70 percent of the $3.5 billion total cost of
solid waste in 1968 extrapolated to 1969 at a 4 percent rate of growth."3
The $3.5 billion does not include the per capita investment in refuse
containers, garbage grinders, on-site and backyard incinerators, and
the money invested by industry for transporting and disposing of their
own materials.
19
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largest component (about 50%), food is next (15-20%), metal is third
(8-11%), and glass is fourth (6-9%). Table 7 provides the results of a
typical study on solid waste composition.
2.3.2 The Beverage Container in Solid Waste
None of the studies of the composition of solid waste has
specifically identified the beverage container share. However, we have
estimated its share based on the weight of beverage containers produced.
In 1969 about 6.630 million tons of glass and metal containers were
produced for beer and soft drinks (see Table 8). We estimate that 2.2
billion of the containers weighing an estimated 0.353 million tons were
littered. An estimated 10 percent of the remainder were self-collected
and self-transported (applying the national average for all residential
and commercial solid waste). The remaining 5.649 million tons of
discarded containers represent about 3.6 percent of the estimated 157.7
million tons of residential and commercial refuse in 1969.
Because solid waste collection and disposal cost data are so
incomplete, there is no completely satisfactory method for estimating
the cost burden placed on solid waste management by the discarded
containers. However, some insights are possible by allocating solid
Table 7. COMPOSITION OF MUNICIPAL REFUSE, 1966-68
Type of Refuse
Food waste
Garden waste
Paper products
Plastic, rubber, leather
Textiles
Wood
Metal
Glass and ceramic
Rock, dirt, ash, etc.
Total
Percent
by weight
18.2
7.9
43.9
3.0
2.7
2.5
9.1
9.0
3.7
100.0
Source: Harry J. Little, "Solid Waste
Composition," Bureau of Solid Waste Management, 1968.
20
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Table 8. ESTIMATED DISPOSTION OF METAL AND GLASS
CONTAINERS IN SOLID WASTE, 1969
Estimated E
weight of c
Type of Weight of littered v
beverage shipments* containers t <
container (million tons) (million tons) c
Cans
Beer
Soft drink
Bottles
Refillables
Beer
Soft drink
Nonrefillables
Beer
Soft drink
Total
1.214
0.898
0.139
0.794
1.627
1.958
6.630
*Can Manufacturers Institute,
0.096
0.038
0.015
0.113
0.076
0.015
0.353
Inc., Annual
estimated weight of
:ontainers in solid
/aste (million tons)
;elf- services
rollectedt collected§
0.112
0.086
0.012
0.068
0.156
0.194
0.628
Report:
1.006
0.774
0.112
0.613
1.395
1.749
5.649
Metal Cans
Shipments. 1969. Washington, D.C., 1970; and Glass Containers
Manufacturers Institute, Glass Containers, 1970 Edition.
^'Research Triangle Institute.
^Based on the assumption that 10 percent of the nonlittered
containers are self-collected and self-trans ported.
§Collected and transported to disposal sites by public or
private sanitation services.
waste costs to beverage containers based on their share, by weight, in
solid waste.
We stated our estimate above that 5.649 million tons of beverage
containers were collected by public and private sanitation services.
At'the average of $13 per ton these services would be valued at $73.4
million. The littered and the self-collected and transported beverage
containers required disposal, but the method and site are unknown.
We have assumed that all littered, self-collected, and services-
collected beverage containers were ultimately disposed of in legal
21
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solid waste disposal sites, requiring an expenditure of $3 per ton, or
$19.9 million, for their disposal. The total cost of beverage container
collection and disposal on a share-of-weight basis is $93.3 million or
3.7 percent of the total cost of collected residential and commercial
solid waste.
The elimination of beverage containers from solid waste, however,
would not reduce the cost of solid waste by the full amount of $93.3
million, because collection costs are not linear with respect to the
quantity of solid waste. That is, small changes in volume do not
result in proportional changes in the cost of collection. Collection
costs are more sensitive to the number of pickups and the distance
between pickups, than to the weight of solid waste at each pickup.
Disposal costs on the other hand, are sensitive to the volume of solid
waste, and a linear relationship is probably a reasonable approximation.
Thus the elimination of all beverage containers from solid waste would
result in savings in disposal costs of about $19.9 million while the
savings in collection costs are indeterminate, but certainly less than
$73.4 million.
The beverage container share of collected residential and commercial
solid waste is increasing. In 1976 the weight of discarded beverage
containers is projected to be 11.255 million tons, assuming the same
average weight per container type in 1976 as in 1969 (see Table 9).
If 5 percent of the containers are littered and 10 percent of the
remainder are self-collected, then 9.697 million tons will be collected
as solid waste. Since residential and commercial solid waste.is
expected to reach 228 million tons by 1976, the share of beverage
containers will then be 4.2 percent of collected residential and
commercial solid waste compared with 3.6 percent in 1969. The littered
and self-collected beverage containers (1.558 million tons) would also
show up in solid waste for disposal. If the costs per ton of collecting
and disposing of solid waste in 1976 remain the same, the collection
cost implied for beverage containers would be $126.1 million and the
disposal cost would be $33.8 million for a total of $159.9 million.
22
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Table 9. PROJECTED DISPOSITION OF METAL AND GLASS
CONTAINERS IN SOLID WASTE, 1976
Estimated
Projected weight of
Type of weight of littered
beverage shipments* containers*
container (million tons) (million tons)
Cans
Beer
Soft drink
Bottles
Refillables
Beer
Soft drink
Nonrefil Tables
Beer
Soft drink
Total
1.805
2.011
0.105
0.589
2.777
3.968
11.255
0.142
0.084
0.010
0.066
0.130
0.048
0.480
Estimated weight of
containers in solid
waste (million tons)
self- services
i collectedf collected§
0.166
0.193
0.010
0.052
0.265
0.392
1.078
1.497
1.734
0.085
0.471
2.382
3.528
9.697
*Research Triangle Institute
tBased on the assumption that 10 percent of the nonlittered
containers are self-collected and self-transported.
fCollected and transported to disposal sites by public or
private sanitation services.
This total would be 4.3 percent of the total cost of $3.69 billion for
residential and commercial solid waste costs projected for 1976 compared
to 3.6 percent estimated for 1969. While the cost per ton of collecting
and disposing of solid waste will probably increase from 1969 to 1976,
this increase will not affect the beverage container share but will
increase the absolute cost.
Three strategies may be ,'ised to diminish the importance of beverage
containers as a solid waste management problem. One is to reduce the
quantity of discarded containers; many legislative proposals attempt to
do this by requiring that beverage containers be returned. Another
approach is to recycle empty containers. About 13 percent of the
aluminum containers were recycled in 1971 (a bounty of about 0.5 cent per
container was paid by the aluminum producers). Finally, better disposal
23
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methods are possible. In open dumps, the beverage containers in their
original shapes may hold moisture and breed mosquitoes and other insects.
Neither material can be composted: glass can be ground and left in the
compost, but steel containers must be removed magnetically or
ballistically. In another process, pyrolysis, the glass and metal must
18
be removed prior to processing, and disposed of separately.
2.3.3 Conclusion
Beer and soft drink containers are a small but growing percentage of
residential and commercial solid waste. However, they do contribute to
the mounting need for land area for disposal and to the increasing costs
of solid waste collection and disposal.
It is obvious that the impact of removing all beverage containers
from solid waste would be small. The largest impacts would be on the
need for land area for disposal and on disposal costs. There would not
be a linear relationship between collection services and costs and a
reduction in the number of beverage containers alone. However, if
lesser amounts of other products were discarded along with fewer
containers so that collection frequencies could be reduced, additional
savings might be possible.
In order to have a significant impact on solid waste management,
a beverage container policy would have to be part of a broader program
for stimulating recycling or encouraging source reduction of many other
waste products.
2.4 Litter
The increased volume of litter along highways and in vacant lots,
waterways, recreation areas, and even in remote forest areas, has
become a national esthetic problem, and is contributing to the mounting
cost of solid waste collection. Public concern is indicated in the
results of a recent survey in which 86 percent of the respondents said
19
they considered littering to be a serious problem.
The beverage container, being both highly visible and representing
a significant share of littered items, has contributed to both the
esthetic problem and collection cost increases.
24
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2.4.1 The Volume and Composition of Litter
Although there have been a number of State and local surveys of
?f)
litter, there has been only one national survey. This was a 29-State
roadside survey of littered items accumulated on primary highways* during
a 30-day period in the fall and winter of 1968 or spring of 1969. The
Research Triangle Institute designed the study, selected the sample,
processed the data, and wrote the report. Each of the participating
States provided the manpower to make the collections. There were 290
road sections, each two-tenths of a mile long, selected at random. Two
pickups were made, the first to remove any accumulated litter and 30 days
later the second in order to determine the monthly littering rates.
The study has several drawbacks which should be noted. First, it
is not comprehensive; it covered only interstate and primary highways.
Secondary State highways and county and local roads were not included.
It was only a roadside survey and did not include forests, parks,
beaches, or other recreational areas, nor were city streets included
in the sample. Also, the survey was made in the fall and winter rather
in the summer when littering is greater. Finally, the study w.as based
on unit counts of littered items. This measure does not provide any
explicit indication of the visibility of the items. In spite of these
limitations, the study can provide valuable insight regarding the
volume and composition of litter.
The study found that the average monthly accumulation of litter
along primary roads was about 1 cubic yard per mile; the accumulation
varying with the volume of traffic. The cubic yard contained an
average of 1,300 items (See Table 10); items not normally collected
(e.g., small scraps of paper, pop tops, broken glass, etc.) are not
included in the 1,300 but these do add to the esthetic and safety
problems.
Using correlations between average daily traffic (ADT) and litter
from the study, we have developed estimates of the total number of items
*Primary highways account for about 12 percent of all rural and
municipal highway mileage 21 and about 48 percent of all vehicle miles.
25
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Table 10. DISTRIBUTION AND ESTIMATED NUMBER OF ITEMS
OF ROADSIDE LITTER ANNUALLY, 1969
Type
of
litter
Paper
Cans
Plastics
Bottles
Miscellaneous
Items
per mile
per month--
primary roads
776
213
75
77
and
special interest 167
Total
Source:
1,308
Research Triangle
Distribution
of littered
i terns
(percent)
59.3
16.3
5.7
5.9
12.8
100.0
Institute, National
Estimated
Number of
items littered
all roads
(millions)
7,127
1,809
650
702
1,707
11,995
Study of the
Composition of Roadside Litter. 1969.
littered annually along our nation's highways. These estimates imply
that ADT is the best single explanatory variable. While this may be so
for highway litter, population may be a more important variable in urban
areas. However, good data on urban littering are not available.
Therefore, the estimates will have to be interpreted carefully.
From the litter-ADT correlations, and based on 1016 billion vehicle
23
miles in 1968, we estimate that about 12 billion items, of a size and
nature normally collected by State highway crews, were littered in 1968.
Because the litter survey covered portions of 1968 and 1969, and since
the estimates of the total items littered are only broad indications, we
have used these estimates as reflecting 1969 littering.
Most of the littered items are paper. Cans (mostly beverage
containers) are the second largest component of the items littered.
There is, however, a subtle but important difference between the items
littered and the items collected. Table 11 illustrates this difference.
In the first pickup, paper items were a smaller percent of the total, and
cans and bottles a larger percent. Although the difference may In part
be due to changes in the rate of littering of items between the two
time periods, we believe the most important factor is that paper
26
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Table 11. DISTRIBUTION OF ROADSIDE LITTER
Type of litter
Paper
Cans
Plastics
Bottles
Miscellaneous and
special interest
Total
First
pickup
(percent)
48.8
28.2
4.7
6.9
11.4
100.0
Second
pickup
(percent)
59.3
16.3
5.7
5.9
12.8
100.0
Source: Research Triangle Institute, National
Study of the Composition of Roadside Litter, 1969,
Table A-01.
degrades or blows away with the passage of time, whereas, cans and
bottles do not.*
The lack of good time-series data on littering precludes the
identification of trends in littering with any certainty. Keep
America Beautiful, Inc. (KAB) has, however, developed a national litter
index from the available data, which is sometimes used to identify
trends. The index is the ratio of vehicle miles to State litter
collection costs with 1964 as the base year. It reflects the
opportunity to litter (vehicle miles) versus behavior (costs), to the
degree that litter costs reflect the volume of litter, and, therefore,
behavior. As Table 12 shows, even though collection costs have been
increasing, the index has declined for the past few years due to the
more rapid increase in vehicle miles. KAB attributes the decline in
the index to the success of public education programs, enforcement of
antilittering laws, and the provision of facilities for disposing of
24
travel trash.
We do not believe, however, that such optimism is justified. The
index is the ratio of vehicle miles to litter collection costs and, as
*If left long enough, steel cans will, of course, rust. However,
most would be collected before they deteriorated.
27
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Table 12. THE KEEP AMERICA BEAUTIFUL NATIONAL LITTER INDEX AND THE
COST OF LITTER COLLECTION ON STATE HIGHWAYS
State litter
collection
Year KAB index costs (million, $)
1964
1965
1966
1967
1968
1969
1970
100.00
101.91
101.41
101.45
102.82
98.26
94.27
$21.6
23.1
29.4
30.9
35.4
37.1
39.5
Source: Keep America Beautiful, Inc.
such, doe's not show the trend of the absolute quantities. Also,
collection costs have been subject to inflation reducing the amount of
real expenditures on litter collection significantly from the reported
collection costs.
With consumption of packaging materials projected to increase at
25
an annual rate of 3.6 percent to 1976, and our projection that
vehicle miles will increase at an annual rate of 4.6 percent to 1976,
it seems probable that littering will grow by at least 4 percent
annually to 1976.
Litter collection costs data are quite fragmentary. KAB has
been tabulating State expenditures for litter collection since 1963.
In that year, the total reported State expenditures were $19.7 million.
The amount has grown about 9 percent per year since then, reaching
$37.1 million in 1969. These costs are only a small part of all
expenditures, however, since they do not include the county, city, and
Federal expenditures for roadside litter collection nor any expenditures
pc
for litter collection in recreational areas. A recent study provides
more complete estimates of total current public litter collection costs
of either $164 or $214 million annually depending on whether the public
costs of cleaning vacant lots are included.* If the private costs of
*These costs still do not include the public costs of collecting
litter from Federal, State, and municipal parks or waterways.
28
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litter collection are included (vacant lot cleanup, voluntary cleanup
campaigns, antilitter advertising, and other donations of time and
materials), the total is about $444 million.* However, since the use
of such voluntary labor does not involve the diversion of productive
labor from alternative uses and since society has not chosen to
allocate more resources to litter collection, it is our opinion that
the costs to society of litter collection are reflected only in the
public costs which are borne by all members of society.
2.4.2 The Beverage Container Share of Litter
On a unit basis, as shown in Table 13, beverage containers
accounted for about 20 percent of the items littered over the one-
month observation of the RTI highway litter study and about 30 percent
of the items collected from the first pickup. These are, however,
national averages and as such mask the differences which exist from
area to area across the nation due to the variety of beverage
consumption, attitudes, and mobility patterns.
The unit basis of measuring litter may cause a serious
underestimation of the visibility of some littered items. For a recent
study in Oregon, the volume of littered items was used rather than their
number in an effort to provide a better indication of visibility. On
that basis, cans and bottles contribute 62 percent of the total volume
27
of litter from along Oregon highways, which is significantly more than
the container's unit share expected if Oregon's litter were typical of
the national average litter composition. The use of volume as the
means of indicating the visibility of littered items, however, implies
that one large item, e.g., a tire casing, would be equal to a number of
smaller items, e.g., beverage containers, even though the casing is
seen once and the containers are spread out over some distance.
What is needed is a better method of measuring the visibility of
*Litter collection at fast-food outlets and shopping centers
costs the owners and tenants of these facilities an estimated $100
million annually. These costs, however, are privately financed.
29
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Table 13. DISTRIBUTION OF THE BEVERAGE CONTAINER ELEMENT OF
ROADSIDE LITTER (PERCENT OF TOTAL ITEMS FOUND IN LITTER)
Type of beverage
container First pickup Second pickup
Cans
Beer 21.7 11.8
Soft drink 4.4 3.1
Bottles
Refill able
Beer 0.4 0.4
Soft drink 1.6 1.6
Nonrefill able
Beer 2.7 2.3
Soft drink 0.8 0.5
Total 31.6 19.7
Source: Research Triangle Institute, National Study of the
Composition of Roadside Litter. 1969, Table A-01.
littered items than is provided by either unit counts or volume
estimates in order to better identify the beverage container share in
the litter problem. Such a measure might be based on the surface area
and reflectability of the littered items. Another possibly is to
survey consumers to determine their perceptions regarding the littered
items as was done in a recent survey of consumers in 4 major cities.
Those surveyed responded that they thought beverage containers were at
28
least 40 percent of litter. This may be a better indication of public
concern over littered beverage containers than would be indicated based
on their unit share.
Since we do not have a thorough, national study that provides any
better indication of visibility than the unit counts provided by the RTI
litter study, we have continued to use it here to develop the analysis
of littered containers. However, as stated above, the tendency of the
data to understate the beverage container share of the litter problem
should not be overlooked.
We conservatively estimate that at least 2.2 billion containers,
30
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or 5 percent of all containers discarded, were littered in 1969 (see
Table 14) based on ADT-littered-container relationships.
As shown in Table 14, cans account for 75 percent of the littered
containers; beer cans alone account for over 60 percent of all littered
containers. The major consumers of beer are between the ages 21 and
34, are motor vehicle operators, and perhaps, may be more likely to
litter if they become inebriated. Soft drink consumers, on the other
hand, are typically between the ages of 10 and 29; many are not motor
vehicle operators and might be restrained by their parents from
littering from the family automobile. Nonrefillable beer bottles and
refillable soft drink bottles accounted for most of the littered bottles
in 1969.
While these figures regarding the number and types of containers
littered are both necessary and useful, additional insights are provided
by comparing the number of littered containers to the number of fillings.
Table 15 provides those percentages.
Table 14. DISTRIBUTION AND ESTIMATED NUMBER OF LITTERED
BEVERAGE CONTAINERS, 1969
Type of
beverage
container
Cans
Beer
Soft drink
Bottles
Refill able
Beer
Soft drink
Nonref ill able
Beer
Soft drink
Total, all types
Items
per mile
per month--
primary
roads
193
153
40
63
26
5
21
37
30
7
256
Distribution
of littered
containers
(percent)
75.4
59.8
15.6
24.6
10.2
2.0
8.2
14.4
11.7
2.7
100.0
Estimated
number of
littered
containers
(mi 1 1 i on )
1,637
1,218
419
596
256
45
211
340
283
57
2,233
Source: Based on data presented in:. Research Triangle Institute,
National Study of the Composition of Roadside Litter, 1969.
31
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From Table 15 we can see that beer cans are littered about twice
the rate of soft drink cans, and nonrefill able beer bottles about four
times the rate of nonrefill able soft drink bottles. However, soft drinks
in refill able bottles are littered about twice the rate of beer in
refillable bottles. We believe the reason for this paradox is that beer
Sold in refill able bottles is frequently less expensive than that sold
in nonrefill able bottles, and beer in refill able bottles is sold mostly
to taverns, bars, and restaurants. It would be quite unwarranted to
assume, therefore, that the littering rate for beer containers could be
reduced to 0.4 percent if all beer were packaged in refill able bottles
with current deposit levels. However, a comparison of the soft drink
littering rates does indicate that the refill able bottle is littered at
a rate somewhat below that for the nonrefill able bottle and significantly
below the rate for soft drinks in cans.
Because of the lack of data on the littering of beverage containers
over several time periods, there is no completely satisfactory method of
identifying the trends in the littering of beverage containers.
Table 15. ANNUAL RATE OF LITTERING OF BEVERAGE CONTAINERS, 1969
Type of
beverage
container
Cans
Beer
Soft drink
Bottles
Refill able
Beer
Soft drink
Nonrefillable
Beer
Soft drink
Total , al 1 types
Proportion of
fillings
littered
(percent)
6.5
7.9
4.2
1.4
0.7
0.4
0.8
3.8
4.7
1.2
3.0*
Source: Research Triangle Institute.
*Estimated number of littered containers
divided by total fillings.
32
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However, some insights on possible future trends can be obtained by
applying the littering rates for 1969 presented in Table 15 to our
containerization projections of 1976. Table 16 provides the results
of these calculations. The result of this exercise indicates that
with the growth in beverage consumption projected and the continued
shifts expected in beverage containerization to the nonrefill able
container, it will take a substantial change in consumer behavior
(which is reflected by the proportion of fillings littered) to keep
the number of littered containers from increasing less than 8 percent
annually. Without such a change in behavior, beverage containers will
comprise about 25 percent of all littered items in 1976 compared to 20
percent in 1969 assuming the number of all littered items increases 4
percent annually.
If we assume that the cost of litter collection is proportional to
the unit share of littered containers and use the estimate of $214
Table 16. PROJECTION OF LITTERED BEVERAGE CONTAINERS, 1976
Proportion
Type of of fillings
beverage littered, 1969
container (percent)
Cans
Beer 7.9
Soft drink 4.2
Bottles
Refi liable
Beer 0.4
Soft drink 0.8
Nonref ill able
Beer 4.7
Soft drink 1.2
Total , al 1 types
Projected
f i 11 i ngs ,
1976
(millions)
—_
28,843
26,328
__
—
8,528
16,805
—
11,744
12,884
—
Projected
1 i ttered
containers,
1976
(millions)
3,064
1,959
1,105
954
168
34
134
786
550
155.
3,937
Annual growth
rate in number
of littered
containers,
1969-1976
(percent)
9.4
7.0
14.9
7.0
-6.2
-4.1
-6.7
12.7
10.0
15.4
8.4
Source: Research Triangle Institute.
33
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million for street, highway, and vacant lot litter collection by public
agencies, then the beverage container's share (20 percent of litter)
is a minimum of $43 million annually or about 1.9 cents per littered
container. However, if both the public and private costs are included,
the costs rise to about 3.9 cents per container. If, as we believe,
the beverage container's importance in litter is significantly greater
than is implied by its unit share of 20 percent because of its visibility
and lack of degradability, it may even be appropriate to allocate a
substantially greater portion of the total litter collection costs to
beverage containers. For example, if beverage containers account for
40 percent of the litter problem, their dollar share would be $86
million for 1969.
If all litter collection costs continue to increase at the annual
average of 9 percent recorded for State highway litter collection costs
over the last six years, by 1976 they will have risen to $392 million.
The beverage container share (25 percent) would then be $98 million.
2.4.3 Conclusion
The littered beer and soft drink containers are a substantial
portion of litter. On a national basis this portion is probably at
least 20 percent of the items littered and 30 percent of the items
collected—the difference being due to the containers' lack of
degradability. Because of the growth expected in beverage consumption
and the continued trend to the more litter-prone nonrefillable
container, it appears that without government intervention, both the
number of containers littered and their share of total litter will be
substantially greater in the future.
The inconsiderate acts of some beverage consumers probably costs
the American public at least $43 million annually. The costs would
undoubtedly be significantly greater if the esthetic costs of a
littered environment could be estimated. Perhaps, for a time, most
citizens were willing to tolerate a littered environment. However,
with the larger number of containers being littered annually plus the
mobility of the population, littered containers are seen more often by
more people than ever before.
34
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In our judgment, beverage containers are an environmental problem
primarily because some consumers of beverages create social costs
by littering their empty containers rather than disposing of them
properly. These social costs are probably substantial because of the
large number of beverage containers littered annually and because of
the littered containers' high visibility. To a lesser extent, beverage
containers are also a problem because they are a growing portion of the
increasing amounts of solid waste that must be suitably collected and
disposed of each year.
The remainder of this report is addressed to the alternatives
available to government to reduce citizens' encounters with littered
beverage containers and the beverage container element of solid waste,
the methodology for choosing among the alternatives, the analysis of the
alternatives, and our recommendations for a governmental policy.
35
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Chapter 3: METHODS OF EVALUATING ALTERNATIVE GOVERNMENTAL POLICIES
3.1 Introduction
The policy alternatives available to the Federal Government for
reducing the social costs of beverage containers can be broadly
classified by types of approach, i.e., legal or administrative
restrictions, financial incentives, and indirect influences.
Classification in this way provides a basis for evaluation of
characteristics common to each approach.
This chapter provides a discussion of the three approaches,
followed by a discussion of the analytical methodology employed in this
study for evaluation of specific policy alternatives within each
approach.
3.2 Restrictions
Restrictions may prohibit the use of nonreturnable containers or
those made of specified materials. Restrictions, therefore, rely
primarily on legal restraint and enforcement.
Of the proposed legislation affecting beverage containers, almost
half could be classified as restrictions although many also have
incentive-type mechanisms attached to them. There are 156 that prohibit
all types of nonreturnable containers and 28 that prohibit either glass
or metal nonreturnable containers; others prohibit aluminum, polyvinyl
chloride, and nondegradable containers, pull-tops, and containers sold
from vending machines. The restrictions often define nonreturnables as
containers on which no reasonable deposit is required.
Restrictions are popular because many view them as being both
efficient and equitable. They are seen as going directly to the heart
of the problem. In this view, if pollution is disruptive to man's
social and natural environment, then it should be prohibited.
Restrictions are often viewed as easy to establish and as equitable
because they treat all polluters equally.
3.3 Incentives
Incentives are economic mechanisms designed to encourage socially
desirable action from producers and/or consumers. For examples:
36
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Deposits may encourage consumers to return empty containers for refilling.
Residuals charges or taxes may encourage consumers to purchase products
with the lowest charges. Subsidies may encourage industry to recycle
wastes.
A number of legislative bills, almost equal in number to those
classified as restrictions, were classified as incentives because they
are economically oriented. Ninety-six bills call for deposits ranging
from 1 to 10 cents, with 5 and 10 cents the most popular amounts.
Sixty-seven impose a tax on the container that varies from 0.25 to 10
cents with the most common amount of 1 cent per container.
3.4 Indirect Influence
There are many alternatives that use indirect influence. A small
percentage of the bills are of this type. Some require voluntary
behavior from consumers or producers. Others propose further research
on some aspect of beverage containerization.
3.5 Methodology for Analyzing Specific Policy Alternatives
Within the three types of approaches available, there are specific
policy alternatives that could be implemented. In order to make an
informed decision regarding the appropriateness of any specific policy
alternative, each must be carefully and systematically analyzed.
Several general criteria have been suggested by EPA for use in such
29
analyses. The remainder of this chapter describes the methodology
to be employed in evaluating each specific policy alternative in terms
of these suggested criteria. Wherever possible, quantitative techniques
have been used. In many cases, however, qualitative judgment is
necessary. The seven criteria to be discussed are: (a) predictability,
(b) benefits, (c) costs, (d) equity, (e) administration, (f) type of
mechanism, and (g) type of approach.
3.5.1 Predictability
Athough this criterion could be broadly applied to the degree of
certainty associated with the estimated impacts of a specific policy on
the other criteria, a narrower definition of predictability is used here.
An attempt is made to predict the probable response in three system
parameters which, in turn, affect many of the other criteria. These
37
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parameters are beverage prices, consumption, and containerization.
Three general levels of the degree of predictability of a policy may
be identified. At the first level, it may not be possible to determine
whether there will be any changes in price, consumption, or
containerization. On the next level, it may only be possible to
determine whether these parameters will increase or decrease. Finally,
it may be possible to quantify the expected change in prices,
consumption, or containerization.
The problems of predicting the probable response in these variables
can be illustrated by observing that in 1967 there were: 188 breweries,
3403 bottlers, 300 metal can and 120 glass container manufacturers,30
31 "\?
129,000 grocery stores, and 199 million consumers, many of whom
would be affected by a specific government policy on beverage containers.
With so many decision points, predictability is limited.
3.5.1.1 Beverage Prices. The prices of beverages are important
both as indications of consumer welfare and because prices influence
consumption.
We have estimated the change in beverage prices resulting directly
from the implications of each policy, using the average beverage prices
shown in Table 17. Any policy that requires the return of nonrefill able
Table 17. AVERAGE BEVERAGE PRICES FOR SINGLE DRINK
CONTAINERS BY CONTAINER TYPE
(10-12 ounce units)
Beer*
Soft drinkt
Refill able
bottles
20*
12*
Nonrefillable
bottles
21*
14*
Cans
22*
15*
*Based on survey price data for premium and regular beer
developed by Hugh Folk for the State of Illinois. Regional
variations are unknown but are probably significant.
tResearch Triangle Institute. Based on popular cola franchise
brands sold by supermarkets at popular prices.
38
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bottles or cans would increase prices an estimated 1 cent per drink to
cover additional handling costs.33
3.5.1.2 Beverage Consumption. Any change in beer and soft drink
consumption will influence many of the other criteria. The two factors
most responsible for changes in beverage consumption are the price of
the beverage and the price of convenience.
Quantitative estimates of the price/consumption relationships for
beer and soft drinks indicate that consumption is relatively unresponsive
to small changes in price. For either beverage, an increase in price of
10 percent would result in a decline in consumption of about 2 percent.*
The price of convenience, or the value to the consumer of the
convenience of not purchasing his beverage in a refillable bottle and
returning it, also affects consumption. As this price increases, some
consumers who prefer the nonrefillable bottle or can are expected to
reduce their consumption of beverages and/or shift to refillable bottles.
Because of problems of multicol linearity between some of the variables
which affect beverage consumption, quantitative estimates of the
relationships between the price of convenience and the consumption of
beer and soft drinks have not been possible within the scope of this
study.
A recent industry-sponsored study provided some insight to the role
attributed by the industry to convenience. The study concluded that
beer and soft drink consumption would decrease 8 percent if these
beverages were packaged only in refill able bottles. This estimate
may, however, overstate the role of convenience, for since the
authors did not identify the means by which such a change in
containerization might take place—for example, what level of mandatory
deposits was contemplated--the implicit assumption exists that the price
for convenience was infinite. In fact, however, the opportunity to
discard a container and thereby avoid the inconvenience of returning it
necessarily exists at a cost. Apparently the authors assumed that the
cost would be so high that virtually no consumers would pay it.
Lacking quantitative data, our judgment and information available
* See Appendix E.
39
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on beverage distribution channels have been used to provide an
estimate of the effect on beverage consumption when a policy increases
the price of convenience.
3.5.1.3 Beverage Container?zation. The changes in container!zation
are not subject to explicitly estimated quantitative relationships. The
changes, however, are frequently implied by the specific policy being
evaluated or else subject to qualitative analysis. Changes.in the. number
and/or type of beverage container may affect the impact that a policy
has in terms of several of the other criteria.
3.5.2 Benefits
The possible benefits of any policy on beverage containers are
related to the rationale for a policy on beverage containers. We
concluded in Chapter 2 that the beverage container is an environmental
problem primarily due to its role in litter, and secondarily, due to
its role in solid waste. A policy generates benefits, therefore, to the
extent to which it is likely to reduce the probability of persons
encountering a littered beverage container, to reduce the beverage
container element of solid waste, and to reduce the associated solid
waste management costs of beverage container disposal.
3.5.2.1 Encounter with a Littered Beverage Container. Given the
mobility of the population, the probability of encountering a littered
beverage container is primarily a function of the rate of littering and
the frequency of litter collection. To reduce encounters with littered
containers, a solution must either reduce the rate of littering and/or
increase collection frequency.
While it is possible to estimate the current rate of littering of
beverage containers, littering is a complex behavioral phenomenon.
Given the limited amount of information available on littering, it is
not possible to quantitatively link a policy with its impact on the
littering of beverage containers. The information developed, however,
is used to make informed judgments on gross changes in littering rates
resulting from a policy.
40
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The frequency of litter collection is dependent on the availability
of resources (labor and equipment) and the willingness of governmental
units to use these resources for litter collection. We have estimated
the increase in collection frequency possible when a policy generates
revenue as the ratio of that revenue to the litter collection costs of
beverage containers without a policy ($43 million in 1969).
3.5.2.2 Beverage Container Element of Solid Waste. The beverage
container element of solid waste is the number of discarded containers.
This number is directly calculated from the consumption and
containerization estimates after subtracting the littered containers.
3.5.2.3 Solid Waste Management Costs of Beverage Containers. The
discarded beverage container affects solid waste management costs when
littered and subsequently collected, or when discarded to controlled
waste collection systems. Reduction in these costs may be considered a
measure of dollar benefits.
In order to estimate the potential savings in solid waste
management costs if fewer containers were littered or discarded to solid
waste, we have used linear relationships between (a) the estimated
number of containers littered and their collection costs, and (b) between
the number of containers discarded to controlled collection systems and
their collection and disposal costs.
It is not expected that any sucn savings would actually be
passed on to taxpayers in the form of a lower tax rate. Such savings,
however, would release additional funds for more frequent collections
of the remaining litter. The assumption of a linear relationship
between costs and the number of littered containers appears reasonable
since the beverage container makes up such a large share of litter.
Furthermore, there are no data which imply any relationship other
i
than a proportional one. Linear relationships between disposal costs
and the number of containers discarded are also probably a reasonable
first approximation. A similar assumption regarding collection costs,
however, probably overstates the savings possible since the beverage
container is only a small share of collected solid waste. Collection
routes and equipment tend to be fixed over the short run and would not
41
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respond to small changes in the quantity of wastes discharged. Since
there are no data available on the marginal costs of solid waste
collection, linear relationships were used. The estimated savings in
collection cost, however, are more a measure of potential savings that
would occur if source reduction were applied to several elements in the
solid waste stream at the same time.
3.5.3 Costs
Costs are the monetary and nonmonetary losses of consumers,
producers, distributors, and government as a result of a policy. These
costs include: beverage prices, cost of convenience, employment,
investment, tax revenues, and personal income. Many of the costs are
of a transitory nature which will cause temporary hardships but are
essentially a redistribution of resources and would not be a net loss
to society. Such redistributions are common in a market economy due to
the shifts in market demand.
3.5.3.1 Beverage Prices. Any increase in the prices of beverages,
all other things being equal, will reduce the welfare of beverage
consumers. Changes in beverage prices are taken from the predictability
criterion.
3.5.3.2 Cost of Convenience. The cost of convenience is the extra
amount a consumer pays not to return a beverage container for refilling.
This pattern of convenience is common to all aspects of modern
American life. The preference for convenience and willingness to pay
for it cannot be ignored without stronger grounds than a difference in
tastes or a feeling that nonrefill able containers are "wasteful". There
is an ever-increasing pressure of time, money, distance, and activities
that may reduce the enjoyment derived from life. Convenience of all
types, including nonrefi11 able beverage containers may be one answer to
the growing complexity of life.
The cost of convenience of an alternative policy is calculated by
multiplying the number of units of beer or soft drinks sold in
nonrefillable bottles or cans in 1969, or projected for 1976, times the
net change in the price of the lowest priced container that will not be
42
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returned. In other words, this is the extra amount all consumers who
purchased, or are projected to purchase, their beverage in nonrefill able
bottles or cans would have to pay to maintain convenience. Economists
will recognize that, lacking a demand function for convenience, we have
estimated the loss in consumer surplus due to a higher price for
convenience in a manner which is fairly accurate for small changes in
price but may significantly exaggerate the loss when the price changes
are large.
3.5.3.3 Employment. Many of the alternative policies have the
effect of changing employment patterns. Both the direct and secondary
employment impacts for the key industries affected have been estimated.
While these estimates capture the main employment impacts, employment
in other industries will also be affected due to the interrelationships
in the economy. All employment losses are expected to be of a
transitory nature, but they would create temporary hardship for some
people. Because they are expected to be transitory, no effort has
been made to calculate the indirect employment effects of the
alternative policies. The employment changes are based on
quantitatively estimated relationships between employment and output for
the soft drink, malt liquor, wholesale beer distribution, glass container
manufacturing, and metal can manufacturing industries. The additional
employment required to handle returned containers in supermarkets was
also estimated. The employment models are discussed in Appendix F.
3.5.3.4 Investment. When a policy significantly changes
containerization or consumption, new investment may be required and/or
existing investment may be made obsolete.
The investment costs of many of the alternative proposals are quite
complex and could themselves be the subject of separate study. One of
the major difficulties is the evaluation of the probable disposition of
equipment which would be made obsolete by an alternative policy. The
abandonment of thousands of machines across the country would certainly
stimulate industry to look for other applications for them. For example,
machines for rinsing containers are not presently economically convertible
to washers. Can-filling machines are not presently economically
43
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convertible to bottle-filling machines. However, given an increase in
the demand for bottle washers and filling machinery, coupled with a
surplus of rinsers and can-filling machinery, such conversions may become
economical. The extent to which such efforts were successful would
significantly affect an alternative proposal's impacts on investment.
The detailed investment analysis made by the Midwest Research
Institute has been used as the basis for computing the change in
investment required.
3.5.3.5 Tax Revenue. Policies which reduce beverage consumption
will reduce tax revenues. There are three possible sources of losses
in tax revenue: beer excise and beverage sales taxes, income taxes,
and equipment writeoffs. None of these possible revenue losses, however,
represent real losses to society since they are reallocations of
resources, not reductions in resource utilization.
Beer excise taxes are currently $9.00 per barrel on the Federal
level and an average of $4.50 per barrel on the State level. This
$13.50 per barrel has been used as a basis for calculating the loss in
tax revenue when beer consumption is reduced.
No changes have been calculated for sales tax revenues since a
reduction in spending on beer or soft drinks would leave consumers
with more money to spend on other items which would probably be
subject to the sales tax.
No changes have been calculated for personal income tax losses since
we expect displaced workers to be hired by other industries.
Tax losses that result from a writeoff of equipment will be of a
temporary nature. The writeoffs estimated by the Midwest Research
Institute have been used.
3.5.3.6 Personal Income. Personal income changes are directly
associated with employment changes. Average wage rates have been used
to calculate the initia]_ income losses when workers are unemployed, and
the income gains when new workers are added. The losses, however, are
transitory to the extent that the unemployed find employment in other
industries.
44
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3.5.4 Equity
Equity is the equal treatment of equals and unequal treatment of
unequals in proportion to their inequalities. For this criteria we
have identified those beverage consumers by type of beverage and
container who would bear the costs of a policy and those who would
benefit.
3.5.5 Administration
Administration is the difficulty involved in implementing and
enforcing a policy, and the political or geographic level on which it
would have to be applied. We have used our judgment in analyzing a
policy's administrative requirement.
3.5.6 Type of Mechanism
We have noted whether the policy is a restriction, uses an
incentive, or relies on indirect influence.
3.5.7 Type of Approach
This criterion identifies whether the approach of the policy is
specific to beverage containers and the beverage container problem or
whether it could be applied to other environmental problems.
45
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Chapter 4: ANALYSIS OF ALTERNATIVE GOVERNMENTAL POLICIES
FOR RESOLVING THE BEVERAGE CONTAINER PROBLEM
4.1 Introduction
Many alternative proposals have been advocated by legislators,
representatives of business and industry, and concerned citizens as
being proper policy for governmental action on the beverage container
problem. This chapter provides an analysis of the ten alternative
proposals which have received the most attention and which cover the
spectrum of alternatives available. The criteria set forth and
discussed in Chapter 3 are used as the basis for this analysis.
When the impact of the alternative proposal in terms of a criterion
can be quantitatively measured, estimates of that impact have been made
for 1969, the last year for which complete data is available, and for
1976. In all cases, the Impacts are calculated as if occurring
instantaneously on a national level. In fact, however, many of the
unfavorable impacts could be reduced by judicious planning and phasing.
The next chapter provides an evaluation of these alternative proposals
based on this analysis and offers recommendations for governmental policy
on the beverage container problem.
4.2 Analysis of the Major Alternatives
Of the ten major alternative proposals, one is inaction--i.e., no
new legislation—three are restrictions, three are incentives, and three
are indirect influences. For many of the proposals, a complete analysis
using all criteria is unwarranted because of uncertain effectiveness or
because a proposal would have to be combined with another proposal in
order to be effective. In these cases, a discussion of the major
characteristics of the proposal has been provided.
4.2.1 Proposal 1: No New Legislation
No action on the beverage container problem is justified unless the
general welfare of society is reduced or threatened. Inaction may still
be preferable to action if a policy cannot be found which is equitable,
administrable, and for which the net benefits exceed costs. Inaction
may be justified if a problem has a low priority. Inaction is justified
46
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at any one level of government if the jurisdiction belongs to another
level. Finally, legislative inaction is justified if the administrative
procedures and financing are already established to handle the problem.
4.2.2 Proposal 2: Ban Nonrefillables (Restriction)
The most popular restriction is the proposal to ban nonrefillables.
A telephone survey of Detroit housewives by the Midwest Research
Institute found that 72 percent of the respondents there favor a ban.
However, a simple ban of nonrefillables may not cause any change in the
current system of beverage containerization since some type of incentive
will be required along with the ban to get consumers to return empty
containers.
One possible alternative to government-established incentives is
to rely on the public-concern of the large corporations that dominate
beer and soft drink production to abide by the spirit of the law. They
would probably require their franchised bottlers and distributors to
impose deposits in order to insure the return of the nonrefillable
containers.
Another incentive is to require deposits of a reasonable amount.
In this case, the deposit is the effective mechanism and the means for
achieving the ban. It is the deposit that is critical, because the
success of the ban will depend on the level of the deposit. Mandatory
deposits are discussed in Proposal 4 below.
4.2.3 Proposal 3: Ban Specific Materials (Restriction)
Six bills pending as of June 1971 would ban aluminum in beverage
containers, four would ban polyvinyl chloride, and twelve would ban
containers that are nondegradable, biodegradable, or combustible.
These bills are apparently based on the belief that the material or
class of materials is obnoxious to the environment. For example, the
littered aluminum can remains intact and shiny and, therefore, highly
visible until collected.
Banning aluminum cans would most likely cause a switch to steel
cans. However, since they would usually be picked up before they began
to rust, it is unlikely that there would be any significant improvement
in the beverage container problem.
47
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Polyvinyl chloride is not now being used nor is it expected to be
used for beverage containers in the United States. Thus a ban on this
material would have no impact on the current beverage container problem.
The proposed bans on nondegradable and noncombustible materials
would be far-reaching since there is presently no degradable, combustible
material that can replace glass or metal beverage containers. Such a
degradable material may even be a polluter as it degrades. If a
substitute material (e.g., plastic or water soluble glass) does become
available, the conversion to the new container would cause dislocations
in the industries concerned and might cause higher prices for beverages
if the new containers were significantly more expensive. This type
container may even cause an increase in littering if it is discarded
more frequently because it is biodegradable.
4.2.4 Proposal 4: Require Specific Materials (Restriction)
The last major restriction is a requirement that only recyclable or
reusable materials be used for beverage containers. Such a requirement
would be impractical without some other mechanism: beverage containers
must be returned if they are to be reused or recycled, and to insure
returns, incentives must be used. Again, the incentive employed to
encourage consumers to return the empty containers is the critical
element of this restriction and must, therefore, be evaluated in its
own right.
4.2.5 Proposal 5: Require Mandatory Deposits (Incentive)
Deposits have been the incentives traditionally used by brewers and
bottlers to encourage the return of empty bottles for refilling. Many
of the pending bills would require a mandatory deposit on all containers.
When specified in pending bills, the deposit level is frequently higher
than that prevailing today; Such mandatory deposits imposed by
government would have the effect of placing an arbitrary value on all
beverage containers and encourage consumers to return the empty
containers and collect their deposit.
4.2.5.1 Predictabi1ity. The outcome that most people expect from
a mandatory deposit would be a return to an all-refilTables bottle system
of beverage containerization. The reasoning behind this expectation is
48
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that if consumers are going to return empty containers, they would buy
their beverages in the lowest priced package, which is usually the
refiliable bottle. Retailers and bottlers can be expected, the argument
goes, to prefer the refiliable bottle for two reasons: (a) it would be
the lowest priced of the three container types, and (b) they would have
to destroy cans and nonrefillable bottles, after refunding the deposit,
to keep them from being returned again and again.
The certainty of the outcome in terms of container type depends
primarily on whether and to what degree consumers return their empty
beverage containers for the deposit. There is, however, no good
information currently available regarding the relationship between the
level of deposits and the percentage of the containers that would be
returned. There is enough evidence to indicate that any relationships
that do exist differ for each area of the nation depending on the local
economic, demographic, and cultural characteristics. Low income consumers
within urban areas apparently return refillable bottles at a lower
frequency rate than high income groups, perhaps because they do not have
adequate transportation, find the return more bothersome than do the
others, or more frequently consume the beverage in some mobile situation.
The northeast region consumes a smaller percentage of soft drinks in
refillable containers than the rest of the country. This behavior may
be due to higher incomes, a greater preference for convenience, or cultural
differences that may place less weight on the informal contractural
obligations implied by the refillable system. The results of a survey of
the national pattern and attitudes toward refillable bottles is shown
in Table 18 and Figure 6.
Several extravagant claims have been made about the lack of
efficacy of higher deposits in raising trippage and improving the
viability of the refi11 able system. An extrmeme example cited is the
alleged experience of Pepsi-Cola in New York City, where the deposit was
raised to 5 cents to protect a new inventory of 600,000 cases of 16-
ounce refillable bottles. It is claimed that in 6 months the inventory
was exhausted and customers had forfeited $720,000 in deposits. This
49
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Table 18. REGIONAL CONTAINERIZATION PATTERNS
Percent of volume
Region
Northeast
South
Midwest
Southwest
Rocky Mountain
West
Refill able
bottles
47
70
72
60
79
50
Unrefi liable
bottles
33
15
14
20
7
27
Cans
20
15
14
20
14
23
Source: Annual Softdrinks Sales Survey, 1970.
QUJ
om
0.4
w-i
u-i
KC
LJ
£§
UJH
OLJ
80
60
IL
A
o
20
UJ
1-
^
&:>•:•
/
.•v
cf
^
o
>/
Figure 6. Consumer survey of returnable-bottle
attitudes (from Softdrinks' Eighth
Annual Report on Supermarket Shopping
Habits, Softdrinks. July 1970).
50
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example has been widely cited, yet there is no one in Pepsi's
headquarters who will support this story. In fact, the increase in
deposits caused many bottlers1 inventories to increase and did maintain
the viability of the system.
Because of lack of data on the level of deposits and the percentage
of containers that would be returned, it is very difficult to predict on
a national basis the probable outcome of mandatory deposits, except for
two deposit levels—high and very low. With high deposits (.probably 10
cents) the outcome should be a return to an all-refillables system.
With a low deposit (perhaps 1 or 2 cents) there will probably be no
significant change in containerization. Between these two levels,
however, the outcome is very difficult to predict. The probable outcomes
are analyzed below for the mandatory high deposit because it is the only
one which will be effective.
(a) Beverage prices
In most areas of the nation, the refill able bottle is the
least cost container for packaging beer and soft drinks. Table
19 shows the price changes for beer and soft drinks in refillable
bottles that would exist with a mandatory 10-cent deposit.
Although we expect a mandatory high deposit to cause a return to
Table 19. PRICE IMPACTS ESTIMATED WITH A MANDATORY HIGH
DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
(per unit prices, single drink containers)
Beer
Actual
Expected outcome
Cnange
Soft drinks
Actual
Expected outcome
Change
Refi
Without
Deposit
20 *
20*
+00*
12*
12*
+00*
liable
Deposi
02*
10*
+08*
02*
10*
+08*
bottles
Total with
t Deposit
22*
30*
+08*
14*
22*
+08*
51
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refill able bottles, there are uncertainties. For example, beer
production is more centralized than soft drink bottling. Because
of the longer transportation distances for beer, there are areas
of the nation where beer in nonrefillable bottles or cans is less
costly than in refill able bottles. For these areas, beer prices
may increase as a result of an all-refillables system.
Comparative, nationwide data does not exist, however, from which
to identify these areas and their importance.
For the house brand* soft drinks, the price impacts are
uncertain. Currently these drinks are packaged only in nonrefillable
bottles and cans and sell at a significant price advantage over
the franchise brands.t Whether the house brands would continue to
be offered under a mandatory high deposit is unknown.
(b) Beverage consumption.
The impact of a mandatory deposit on beverage consumption is
difficult to predict due to the lack of data on the importance of
convenience to consumers. Bulk sales of beer and soft drinks
(about 17 and 20 percent respectively of total sales) would not be
affected. However, the increased cost of convenience would tend to
reduce the demand for beverages by consumers who had been purchasing
beer and soft drinks in nonrefillable containers. In 1969, these
consumers purchased about 73 percent of all packaged beer and 42
percent of all packaged soft drinks. Our judgment is that
purchases of 6 packs and similar large quantities of beverages for
household consumption would not be greatly affected. There might be
some initial resistance, but this should disappear as consumers
become accustomed again to returning empties when they purchased
beverages. With a high deposit it is conceivable though probably
not very likely that there would be collections of bottles from the
home by entrepreneurs who would pay an amount less than the deposit
*House brands are those sold under the retailer's name.
tFranchise brands are the major national brands.
52
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to collect the full deposit. Such entrepreneurs might even
undertake household delivery of beverages since they would be
going to the home to collect the empties anyway.
Single-unit, single-drink sales of beverages, however, would be
affected by a mandatory high deposit and the return to an all-
refillables system. While single-unit, single-drink purchases of
beer probably do not make up a large percentage of packaged sales,
such sales are important for soft drinks. A survey of soft drink
purchases in supermarkets revealed that in 1970, 26 percent of
o/r
those interviewed had purchased 5 or fewer containers. However,
many shoppers had probably purchased quarts and not single-drink
sizes so this figure may overstate the figures for single-unit,
single-drink purchases. Vending machine (vended) sales would be
more affected than regular retail sales. In 1969, about 20
percent of soft drink sales were vended. About 29 percent of
this amount is packaged in cups and would be unaffected by a
38
mandatory deposit. Therefore, 71 percent of vended sales or,
alternatively, about 14 percent of all soft drink sales would be
the most likely to experience significant sales decreases.
After examining the available data on containerization,
distribution, and sales of beverages, it is estimated that the
decrease in beer and soft drink consumption would be about 4
percent.* This is based on the assumption that one-half of the
This is at least double the consumption reduction implied by a
Midwest Research Insitute (MRI) survey of consumers.39 Consumers were
asked how much their family's purchases of beer and soft drinks would
be reduced if there were a law banning nonreturnable bottles and cans.
The responses were grouped into broad percentage responses (0%, 1-10%,
11-25%, 26-50%, and 51-100%). Using the lower and upper bounds of each
response class and multiplying by the percentage of consumers in each
class, the weighted response is 1.1 to 2.8 percent reduction in both
beer and soft drink purchases. This analysis assumes the percentage of
consumers in each response class account for the same percentage of all
purchases, and does not include those who didn't know what their
consumption reduction would be.
In their study, however, MRI used an estimate of eight percent^
reduction in consumption with an all-refillables system. This estimate
reflects the beverage industry consensus.
53
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single-unit, single-drink purchases would not be made with a
mandatory high deposit, and that one-half of the vended sales that
are made in a mobile situation (traveling as compared to work or
recreational settings) would no longer be made. Assuming no effect
on the rates of growth projected for beverage consumption, these
losses in consumption would be a temporary interruption in the
sales growth of beer and soft drinks and would be.made up in about
one year.
(c) Beverage containerization.
Legislation for mandatory deposits generally does not specify
the nature of the container that must be used. Our conclusion is
that the bottlers and breweries would find it worthwhile to use
refill able containers if they are going to receive all or
virtually all of the empties. At the present time the only
refillable container is a relatively heavy glass bottle.* However,
cans may become refill able or a glass bottle may be developed that
is cheaper to recycle than to refill. Under present conditions,
with the imposition of mandatory high deposits, beer and soft
drinks would probably be packaged in refill able bottles, and the
nonrefill able bottles and cans would be completely eliminated. A
few cans might be produced for the luxury or convenience trade
(e.g., camping) where lightness and compactness are desired.
The trippage cannot be predicted with a mandatory 10-cent
deposit. Our assumption is that present levels of trippage
would prevail. The rate might rise because of greater returns or
scavenging. On the other hand, it could fall if consumers were
willing to forfeit the deposit for convenience. This possibility
does not seem very likely, however, because every container would
be worth ten cents and even Americans do no seem so profligate as
to throw away this amount.
Table 20 presents the containerization changes expected from
a 10-cent deposit. Under 1969 containerization, more than 13
*Some brewers on the West Coast are currently refilling
nonrefill able bottles.
54
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Table 20. CONSUMPTION AND CONTAINERIZATION IMPACTS ESTIMATED WITH A
MANDATORY HIGH DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
(millions of fillings)
Refill able
bottles
Nonrefiliable
bottles
Cans
Total
1969
Beer
Actual 12,356
Expected outcome* 34,508
Change +22,152
Soft drinks
Actual 28,722
Expected outcome* 44,975
Change +16,253
6,882
0
-6,882
6,363
0
-6,363
16,708
0
-16,708
11,764
0
-11,764
35,946
34,508
-1,438
46,849
44,975
-1,874
1976
Beer
Trend 8,582
Expected outcome* 43,362
Change +34,780
Soft drinks
Trend 16,805
Expected outcome* 53,776
Change +36,971
11,744
0
-11,744
12,884
0
-12,884
24,843
0
-24,843
26,328
0
-26,328
45,169
43,362
-1,807
56,017
53,776
-2,241
Source: Research Triangle Institute.
Consumption is assumed to decrease 4 percent due to the higher
cost of convenience with a mandatory high deposit.
billion nonrefill able bottles and 28 billion cans would not have
been produced if there had been a mandatory high deposit sufficient
to cause a return to a refillables system. An additional 1.5
billion refiliable beer bottles would be needed to handle the new
fillings and nearly 1 billion more refi11 able soft drink bottles,
assuming a trippage of 15.*
*Current estimates of trippage are 14 for soft drinks and 20 for
beer bottles.40
55
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4.2.5.2 Benefits.
(a) Encounter with a littered beverage container.
The littering of beverage containers should virtually cease
with a mandatory high deposit (10 cents). Most containers littered
would probably be quickly scavenged.
(b) Beverage container element of solid waste.
All beverage containers are expected to disappear from solid
waste with a mandatory high deposit.
(c) Solid waste management costs of beverage containers.
Since virtually no beverage containers are expected to be
littered with a mandatory high deposit, there would be a potential
savings of $43 million in litter collection costs (1969) assuming
that beverage container collection costs are directly proportional
to their unit share of all littered items.
Solid waste disposal costs are probably proportional to the
volume of the solid waste although there are some fixed costs
which would not be affected by a small reduction in the volume of
solid waste. Collection costs are not linear to the volume (or
weight) of solid waste, but since there are no data available on
the marginal costs of collection, we have assumed a linear
relationship for this analysis. For 1969, the cost of beverage
containers in solid waste was estimated in Chapter 2 at $93.3
million. This amount would be the size of the benefits if all
beverage containers were eliminated from solid waste.
4.2.5.3 Costs.
(a) Beverage prices
The average price paid by all consumers for beer and soft
drinks should decrease because the higher priced nonrefiliable
bottles and cans are not expected to be available with a mandatory
high deposit. This price reduction is not a benefit because the
consumer is forced to purchase the beverage (if he still wants it)
in a container and at a price that was previously available, but
that many consumers did not choose.
56
-------
Beverage prices were not projected to 1976 but kept at
existing levels for the analysis. It is possible that prices,
especially the differential prices between the various container
types, will change by 1976 because of technology and labor wage
rate changes. The refill able system uses large numbers of
relatively low-paid employees. If the productivity of these
workers lags behind that of the workers producing beverage
containers, as is probable, the price advantage of refillables
could be lost and refillables would then be phased out if there
were no government policy that encouraged refillables. There is
virtually no possibility that refillables would continue to be
used if they did not offer a price advantage. If there is no
price advantage and consumers are still forced to use refill able
bottles as a result of a governmental policy, the price increase
would then be a true social cost.
(b) Cost of convenience.
Many consumers are presently payino an average of 2 cents
extra per filling for soft drinks and 1 cent extra for beer in
order to have the convenience of a one-way, single-drink container
that they do not have to return for a deposit. These convenience-
oriented consumers would have to pay an additional 9 cents for
beer and 8 cents for soft drinks, if they discarded the refillable
bottle with a 10-cent deposit.* The cost of convenience is the
most important social cost of an all-refillables system because it
is a significant loss in welfare and not an income transfer or a
real location in economic activity.
The extra expenditures for convenience by beverage consumers
in 1969 was about $598.4 million. With a mandatory 10-cent deposit,
the consumers that purchased beverages in nonrefillable bottles and
cans in 1969 would have to pay an additional $3,573.3 million to
*The reason they don't pay an additonal 10 cents rather than the
9 and 8 cents is because beer and soft drinks in refill able bottles are
slightly cheaper (1 and 2 cents respectively) than when packaged in
nonrefillable bottles.
57
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Table 21. COST OF CONVENIENCE IMPACTS ESTIMATED WITH MANDATORY
HIGH DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
Per Total
filling (millions)
1969
Beer
Actual* 1.0* $ 235.9
Expected outcomet 10.0* 2,359.0
Change 9.0* 2,123.1
Soft drinks
Actual* 2.0* $ 362.5
Expected outcomet 10.0* 1,812.7
Change 8.0* 1,450.2
1976
Beer
Trend* 1.0* $ 365.9
Expected outcomet 10.0* 3,658.7
Change 9.0* 3,292.8
Soft drinks
Trend* 2.0* $ 784.2
Expected outcomet 10.0* 3,921.2
Change 8.0* 3,137.0
Source: Research Triangle Institute.
*Current price differential between beverage in refill able
and nonrefillable bottles.
tThis is the amount all consumers who had purchased, or are
projected to purchase, their beverage in nonrefill able bottles and
cans without the mandatory 10-cent deposit would have to pay to
maintain convenience.
maintain the convenience of not having to return the empty
containers. See Table 21.
(c) Employment.
An all-refilTables system of beverage containers would cause
large additions to employment (60,800) in the beverage and
distribution industries and large reductions (60,500) in the
beverage container industries. The net effect is a small increase
58
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Table 22. EMPLOYMENT IMPACTS ESTIMATED WITH A MANDATORY
HIGH DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
(thousands)
Industry
Soft drinks
Malt liquor
Wholesale beer
Retailing
Glass containers
Metal cans
Metals
Total
Gain
Loss
Net
1969
Actual
128.6
58.1
59.9
19.6
71.5
68.1
617.7
1.023.5
Expected
outcome*
141.2
61.3
74.5
50.0
55.8
38.6
602.4
1,023.8
Change
+12.6
+ 3.2
+14.6
+30.4
-15.7
-29.5
-15.3
+60.8
-60.5
+ 0.3
1976
Trend
147.7
62.0
70.9
11.1
76.8
86.3
617.7
1,072.5
Expected
outcome*
178.6
69.3
93.0
60.9
43.9
39.1
593.1
1,077.9
Change
+30.9
+ 7.3
+22.1
+49.8
-32.9
-47.2
-24.6
+110.1
-104.7
+ 5.4
Source: Research Triangle Institute.
*Beer and soft drink consumption is assumed to decrease 4 percent due to the
higher cost of convenience with a mandatory 10-cent deposit.
in employment. Table 22 lists the major gaining and losing
industries. With total expenditures'on beverages expected to be
lower because of lower average prices, consumers will have extra
income to purchase other products. Employment should then be
created in other sectors of the economy as this income is spent.
These changes in employment do not by themselves represent a
gain-or loss to the economy. Some losses will result while those
unemployed are looking for other jobs. Changes in demand and
employment among industries occurs constantly in the U.S. economy.
The switch to an all-refilTables system would be a very drastic
change centered in relatively few locations, so special steps might
be taken to ease the impact.
(d) Investment.
A change to an all-refillables system brought about by a
59
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Table 23. INVESTMENT IMPACTS ESTIMATED WITH A MANDATORY
HIGH DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
(millions)
Soft drinks
Malt liquor
Wholesale beer
distribution
Retai 1 i ng
Glass containert
Metal can
Metals
Total
Total
wri teof f
$ 181
169
-0-
-0-
161
550
300
$1,361
New
investment*
$ 345
501
298
24
-0-
-0-
-0-
$1,168
Source: Jeff Mai Hie,.The National Economic Impact
of a Ban on Nonrefill able Beverage Containers. Mi dwes t
Research Institute, Kansas City, 1971, pp. 23,83,75,76,
78, and Research Triangle Institute.
*These figures are four percent lower than the
amounts estimated if consumption had remained constant.
MRI assumed an 8 percent decline in consumption.
tTrippage of 15; MRI assumed a trippage of 8.
mandatory high deposit of 10 cents would require additional
equipment to fill and distribute refiliable bottles. Much of the
equipment used to manufacture and fill nonrefillable bottles and
cans would become obsolete, useless, or superfluous. Table 23
contains estimates of both the writeoffs and new investment for
1969 with a 4 percent change in consumption. These changes in
investment are based on estimates provided by Midwest Research
Institute for the investment impacts of an all-refillables system
with no change in consumption, adjusted downward by 4 percent by
RTI to reflect the lower consumption expected with an all refillables
system.
(e) Tax revenue.
The drop in beer consumption and a shift to a refillables-only
system of beverage containerization expected from a mandatory high
60
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Table 24. BEER EXCISE TAX IMPACTS ESTIMATED WITH A MANDATORY
HIGH DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
Consumption Tax*
(million barrels) (millions)
1969
Actual 114.9 $1,551.2
Expected outcome 111.1 1,499.9
Change 3.8 51.3
1976
Trend 145.5 $1,964.3
Expe cted ou tcome 140.7 1,899.5
Change 4.8 64.8
Source: Research Triangle Institute.
*Based on Federal excise tax of $9.00 per barrel and an
average State excise tax of $4.50 per barrel.
deposit will reduce beer excise tax revenues, and corporate tax
revenues due to the investment writeoffs.
As shown in Table 24, with a consumption decrease of 4 percent
1969 beer excise tax revenues would be reduced by $51.3 million.
The total investment writeoffs, using the Midwest Research
Institute's estimates would have been $1.4 billion. The metal cans
and metals industries account for almost two-thirds of the total.
If the writeoffs were spread over 5 years, the tax loss would be
about $271 million annually for the period.
Since the writeoffs are made against pretax profits, the
affected companies would keep a large share of their profits than
otherwise, probably distributing some of it to their stockholders
where it would be taxed. Therefore the $271 million probably
somewhat overstates the tax loss.
(f) Personal income
The employment change will cause changes in the personal income
generated by the beverage industries and their suppliers. Table 25
61
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Table 25. PERSONAL INCOME IMPACTS ESTIMATED WITH A
MANDATORY HIGH DEPOSIT (10 CENTS) ON BEVERAGE CONTAINERS
(mi 11 i ons)
Industry
Soft drinks
Malt liquor
Wholesale beer
Retai 1 i ng
Glass containers
Metal cans
Metals
Total
Gain
Loss
Net
1969
Actual
$834.1
578.8
470.7
113.8
189.4
260.0
144.7
$2,591.5
Expected
outcome
$915.8
610.7
585.4
290.1
75.5
0
0
$2,477.5
Change
+$81.7
+ 31.9
+114.7
+176.3
-113.9
-260.0
-144.7
+404.6
-518.6
-114.0
1976
Trend
$956.0
617.6
557.1
64.4
317.1
416.4
233.0
$3,161.6
Expected
outcome
$1,158.4
690.4
730.8
353.6
78.4
0
0
$3,011.6
Change
+$202.4
+ 72.8
+173.7
+289.2
-238.7
-416.4
-233.0
+738.1
-888.1
-150.0
Source: Research Triangle Institute.
shows the earnings in the beverage industries and that part of the
container, metal, and retailing industries that can be attributed
to beverage containers. The total earnings under an all-refillables
system are lower even though employment is higher. The reason is
that the industries gaining employment generally have lower average
earnings than those losing employment. Average earnings per
employee under the present system were $7,688 in 1969 while an all-
refillables system would have generated average earnings of $7,343.
The difference in total earnings is $114.0 million in 1969 and
$150.0 million in 1976 if present earnings rates prevail. It is
likely, however, that the differential between earnings in the
various industries will narrow by 1976 and there may not be any
reduction in earnings by that time.
4.2.5.4 Equity. A mandatory deposit on all beverage containers
increases the cost of convenience to those beverage consumers who do
62
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not wish to return their empty containers whether or not they litter
them. A mandatory high deposit (which is expected to result in an
all-refillables system) also reduces the consumers' choice of con-
tainer for beverages.
4.2.5.5 Administration. A mandatory high deposit creates
various administrative problems, particularly if it is only
established in a State or smaller area, rather than nationwide. A
deposit system usually operates through a two-step process. The
bottler, brewer, or distributor requires a deposit on each bottle
from the retailer, who then requires a deposit from the consumer.
The simplest technique for administering a mandatory deposit would
be to require the distributor to demonstrate that he has received
deposits from the retailer. The retailer in turn would then impose
the deposit on the consumer so he would not lose his deposit. Spot
checks could be made to insure that the deposit was being applied at
the retail level.
The biggest problem is to insure that a deposit is refunded
only if one has been made; that is, bottles from other areas with
lower deposit levels should not be redeemed in an area with a high
deposit. One way to prevent this possibility is to require a
distinctive mark on the container. Another would be to require
that the crown be returned and it could be marked distinctively.
A convention that deposits would be applied only to the purchase of
additional beverages would also reduce the incidence of
interregional flows, although such an approach would impose another
inconvenience on the consumer.
A possible problem with a high deposit that has been put
forward is counterfeiting of bottles in order to collect the
deposit. This is very unlike'iy. Glass container factories are
large operations that require large amounts of capital and long
lead times. Refillable soft drink bottles currently sell for about
10 cents, which also happens to be the most common high deposit
proposed. Thus there would be little profit in counterfeiting.
63
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Finally, the precautions mentioned in the preceding paragraph would
tend to make counterfeiting risky and unattractive.
4.2.5.6 Type of Mechanism. The mandatory deposit proposal
works through the market economy in achieving its objectives.
Deposits are a currently accepted means of insuring that many rented
items are returned. In almost all cases, however, the deposits are
voluntarily established and set by the manager of the business to
protect his investment. For example, deposits are commonly
collected in renting real estate and other real property.
4.2.5.7 Type of Approach. A mandatory deposit is a fairly
limited mechanism most applicable to products which can be reused.
As such, it probably could not be effectively applied to other
littered items or solid waste problems.
4.2.6 Proposal 6: Tax (Incentive)
A tax on beverage containers could impose on the beverage consumer
the external costs incurred by society due to the littering of
beverage containers. Such a tax would be on the container, the item
littered, rather than on the filling, or the drink. Ideally the tax
should be avoidable. If a consumer does not litter his empty
container, the tax should be refunded. However, in practice, providing
for refundabi1ity may be administratively difficult.
There are two general approaches to determining the proper level of
a tax on beverage containers. The first would be to make the tax equal
to the average per container social costs of all littered containers,
by dividing the social costs by the number of containers produced.
The second approach would be to set the tax at a level which would
reflect the social costs of a littered container, by dividing the costs
by the number of littered containers. Table 26 shows the difference
in the tax rates under the two approaches for only the collection cost
portion of the social costs of littered containers.
Nonrefuhdable taxes of 0.5 and 5.0 cents are analyzed below. These
levels were selected in order to allow for the esthetic costs of a
littered environment as well as the costs of collecting littered
containers.
64
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Table 26. LITTERED BEVERAGE CONTAINER COLLECTION .COSTS
ON A UNIT BASIS, 1969
Estimated
number of
littered
containers
(millions)
2,233
Source:
Estimated cost
of collecting
1 i ttered
containers
(mi 1 1 i ons )
$43
Research Triang'
Number of
containers
produced
(millions)
43,835
le Institute.
Average
collection
cost per
container
(cents)
0.1
Collection
cost per
littered
container
(cents)
1.9
4.2.6.1 Predictability. The low tax (0.5 cent) has greater
predictability than the high tax (5.0 cents) because fewer changes in
consumer behavior are expected.
(a) Beverage prices.
A nonrefundable tax will raise the price of beverages. The
price increase for nonrefillable bottles and cans will be equal to
the tax. The price increase for refillables will be substantially
less because the tax can be amortized over several fillings. Table
27 shows the expected price changes. The price changes for beverages
in nonrefill able containers are substantial enough to expect that
they will be passed along to consumers. The prices of beverages in
refillable bottles, especially under the low tax, however, may not
result in immediate increases in beverage prices. As Table 27
shows, because the initial expected price changes would
significantly widen the price differential between refillables and
nonrefillab!es, deposits on refillables have been increased by 3
cents to keep consumers from treating them as convenience
containers and discarding them.
The problem of predicting price changes is compounded somewhat
by the possibility that some retailers may use the tax as an
excuse to raise beverage prices still further. This can happen if
beverage producers either formally or informally agrees to raise
prices in concert. Competition and the possibility of antitrust
action should, however, keep prices down to levels where costs are
covered and a normal return on investment exists.
65
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Table 27. PRICE IMPACTS ESTIMATED WITH A TAX ON BEVERAGE CONTAINERS
(single drink sizes)
en
CTl
Low tax (0.5 cent)
Beer
Actual
Expected outcome
Change
Soft drinks
Actual
Expected outcome
Change
Beer
Actual
Expected outcome
Change
Soft drinks
Actual
Expected outcome
Change
Beverage
price
20.00*
20.03*
+ 0.03*
12.00*
12.03*
+ 0.03*
Beverage
pri ce
20.00*
20.33*
+ 0.33*
12.00*
12.33*
+ 0.33*
Refill able
bottles
Plus
deposit
2.00*
2.00*
0.00*
2.00*
2.00*
0.00*
High
Refill able
bottles
plus
deposit*
2.00*
5.00*
+3.00*
2.00*
5.00*
+3.00*
Total
cost
22.00*
22.03*
+ 0.03*
14.00*
14.03*
+ 0.03*
tax (5.0
total
cost
22.00*
25.33*
+ 3.33*
14.00*
17.33*
+ 3.33*
Nonrefillable
bottles,
total
cost
21.00*
21 .50*
+ 0.50*
14.00*
14.50*
+ 0.50*
cents)
Nonrefillable
bottles ,t
total
cost
21 .00*
26.00*
+ 5.00*
14.00*
19.00*
+ 5.00*
Cans,
total
cost
22.00*
22.50*
+ 0.50*
15.00*
15.50*
+ 0.50*
Cans.t
total
cost
22.00*
27.00*
+ 5.00*
15.00*
20.00*
+ 5.00*
Source: Research Triangle Institute.
*Deposits are expected to increase voluntarily; since, without such an increase, beverages in
refillable bottles could be purchased and discarded at a price to the consumer which is less than
that for the same beverage in nonrefiliable bottles and cans.
tThese prices are for illustration only since with a high tax, nonrefillable bottles and cans
are not expected to continue to be used to package beer and soft drinks due to their significant
cost disadvantage over refillable bottles.
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(b) Beverage consumption.
The low tax of 0.5 cent is expected to decrease only
slightly the consumption of beverages in nonrefill able containers
(0.5 percent for beer and 0.7 percent for soft drinks) due to the
higher prices. Since the changes in beverage consumption under a
low tax are less than one percent, we have assumed that the system
will not be responsive to such small changes. Therefore, the
small changes in consumption expected under a low tax, have not
been used to calculate changes in any of the other criteria, such
as employment or income, which are affected by consumption.
A high tax, of 5.0 cents per container, would widen the price
differential between refillable and nonrefillable bottles and cans
and probably would be sufficient to encourage most consumers to
purchase their beverages in refillable containers rather than pay
the higher cost of convenience. In the analysis of high mandatory
deposits given above, it was estimated that if the cost of
convenience rose to such a level that virtually no consumers would
pay for it, then consumption of packaged beer and soft drinks
would decrease by 4 percent each. We continue to use that estimate
here.
(c) Beverage containerization.
The small price increase, and hence consumption changes
expected with a low tax, would not result in any significant
changes in beverage containerization.
The high tax, however, is expected to cause a shift to a
refillables-only system as discussed above. Table 28 shows the
expected impacts.
4.2.6.2 Benefits. The benefits of a low tax are mainly in the
form of revenue generation, whereas the benefits of a high tax are in
revenue generation; reduced rates of littering of beverage containers,
and reduced discard of containers to solid waste.
(a) Encounter with a littered beverage container.
The low tax will cause no change in the rate of littering;
however, it would produce revenue. About $219 million would be
67
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Table 28. CONSUMPTION AND CONTAINERIZATION IMPACTS
ESTIMATED WITH A TAX ON BEVERAGE CONTAINERS
(millions of fillings)
1969
Beer
Actual
Expected outcome*
Change
Soft drinks
Actual
Expected outcome*
Change
197$
Beer
Trend
Expected outcome*
Change
Soft drinks
Trend
Expected outcome*
•Change
Low tax
(0.5 cent)
Refi liable Nonrefi liable
bottles bottles
12,356 6,882
No significant
change
28,722 6,363
No significant
change
8,582 11,744
No significant
change
16,805 12,884
No significant
change
Cans Total
16,708 35,946
No significant
change
11,764 46,849
No significant
change
24,843 45,169
No significant
change
26,328 56,017
No significant
change
High tax
(5.0 cents)
Refi 11 able
bottles
12,356
34,508
+22,152
28,722
44,975
+16,253
8,582
43,362
+34,780
16,805
53,776
+36,971
Nonrefi liable
bottles Cans
6,882 16,708
0 0
-6,882 -16,708
6,363 11,764
0 0
-6,363 -11,764
11,744 24,843
0 0
-11,744 -24,843
12,884 26,328
0 0
-12,884 -26,328
Total
35,946
34,508
- 1,438
46,849
44,975
- 1,874
45,169
43,362
- 1,807
56,017
53,776
- 2,241
00
Source: Research Triangle Institute.
Consumption is assumed to decrease 4 percent due to the higher cost of convenience with a high tax.
-------
raised using 1969 beverage consumption levels, or $385 million
using 1976 trend levels. This rapid increase in tax revenues is
due to the continuing trend toward nonrefillable containers.
Since the tax is on the container, not the filling, these
containers generate most of the revenues. These revenues, if
devoted to collecting littered beverage containers could increase
collection frequencies about 5 times.thereby resulting in a
cleaner environment.
There are several reservations that must be made. One is
that the revenues might merely substitute for present funds and
would not result in a cleaner environment. This possibility,
while undesirable, would at least cause the most offensive part
of litter to pay for its own removal. Such a substitution
could be taken to indicate that a cleaner environment does not
rate very highly as a government priority and to indicate that
government officials believe that sufficient funds are now being
expended. A second reservation is that even with more frequent
litter collections, all types of litter rather than just beverage
containers would undoubtedly be picked up. We cannot expect to see
5 times fewer littered beverage containers simply because the
revenues raised by a tax on beverage containers are 5 times greater
than the beverage container share of litter costs, because it
would be impractical as well as inefficient to pick up beverage
containers without picking up all types of littered items.
The high tax produces substantially different impacts on
litter. Since we expect a high tax imposed by the government to
be accompanied by a voluntary increase in deposits on refillables
by the beverage distributors in order to keep convenience-minded
customers from discarding them, the rate of littering should be
substantially reduced. Many of those that continue to be littered
might be scavenged for their deposit value. Also, the tax on
beverage containers, assuming a 4 percent decrease in consumption
andj a tribpage of 15, would raise approximately $265 million with
1969 consumption,-or $324 million for 1976, that.could;be~-used to
69
-------
Increase the frequency of litter collection about 5 times. The
revenues from a high tax do not rise as rapidly as those from a
low tax because the high tax is expected to result in a refillables-
only system and the revenue increases then become directly tied to
consumption rather than the changing mix of container types and
consumption. As a result, revenues from a high tax are greater
than those from a low tax for 1969 but less for 1976.
(b) Beverage container element of solid waste.
The low tax will not significantly change the number of
containers discarded. The high tax will reduce the beverage
container share of solid waste to mostly the broken refillable
bottles, many of which would probably be recycled since most of
the breakage would occur at the bottling plants.
(c) Solid waste managment costs of beverage containers.
There would be no change in solid waste collection and
disposal costs under a low tax since no significant changes are
expected in beverage consumption or containerization. Litter
collection costs would increase if the revenues were spent on
increased collection frequencies. The increased expenditures,
however, would not be financed out of the ordinary tax sources.
The high tax, with virtually no littering of beverage
containers expected because of the anticipated voluntary increase
in deposits, could save $43 million that was spent for the
collection of littered beverage containers in 1969. The potential
savings estimated for solid waste are $93.3 million for 1969,
again assuming a linear relationship between the beverage
container share by weight and the collection and disposal costs.
4.2.6.3 Costs. The costs to the beverage industries and
consumers of a low tax are fairly small since only small changes are
expected in beverage prices, consumption, and containerization. The
high tax has substantial costs in terms of beverage prices, cost o'f
convenience, employment, investment, tax revenues, and personal income.
(a) Beverage prices.
The low tax increases the price of beer in nonrefiliable
70
-------
bottles and cans by about 2.3 percent and soft drinks by about 3.5
percent. Prices of beverages in refillable containers would
probably not be significantly affected.
The high tax would initially increase beverage prices in
nonrefill able bottles and cans by about 23 percent for beer and 34
percent for soft drinks. As indicated above, these increases are
expected to cause a shift to an all-refilTables system where beer
prices would increase by 2 percent and soft drinks by 3 percent.
These figures are national averages. In some sections of the
nation, beer in refillable bottles may increase substantially more
in price due to higher transportation costs.
(b) Cost of convenience.
Consumers paid $598.4 million in 1969 and are projected to pay
$1,150 million by 1976 for the convenience of not having to return
empty beer and soft drink containers. With the tax, the cost of
convenience will increase by the amount of the tax. As shown in
Table 29 the low tax will increase the amount consumers would have
to pay by $208 million for the 1969 consumption rate and $379
million in 1976 to maintain convenience. Under the high tax,
consumers would have to pay an additional $1,613 million for the
1969 consumption rate and $2,867 million in 1976 to maintain
convenience. As discussed above, consumers are not expected to pay
this higher cost of convenience unaer a high tax; rather a switch
to refill able bottles is expected.
(c) Employment.
Since no substantial changes in beverage consumption or
containerization are expected with a low tax, employment will be
unaffected. >
The net employment effects of a high tax are expected to be
an increase of about 300 jobs (1969 rate) with the all-refilTables
system and the expected 4 percent decrease in consumption. The
largest employment losses are expected in the container
manufacturing industries. The gains are expected in the beverage
producing, distribution, and retailing industries due to the
71
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Table 29. COST OF CONVENIENCE IMPACTS ESTIMATED WITH A TAX ON
BEVERAGE CONTAINERS
Low tax High tax
(0.5 cents) (5.0 cents)
Per
f i 11 i ng
Total Per
(millions) filling
Total
(millions)
1969
Beer
Actual* 1.0* $235.9 1.0* $ 235.9
Expected outcomet 1.5* 353.8 5.3* 1,250.3
Change +0.5* +117.9 +4.3* +1,014.4
Soft drinks
Actual* 2.0* $362.5 2.0* $ 362.5
Expected outcomet 2.5* 453.1 5.3* 960.7
Change +0.5* +90.5 +3.3* +598.2
1976
Beer
Trend* 1.0* $365.9 1.0* $ 365.9
Expected outcomet 1.5* 548.8 5.3* 1,939.1
Change +0.5* +182.9 +4.3* +1,573.2
Soft drinks
Trend* 2.0* $784.2 2.0* $ 784.2
Expected outcomet 2.5* 980.2 5.3* 2,078.2
Change +0.5* +196.0 +3.3* +1,294.0
Source: Research Triangle Institute.
*Current price differential between beverage in refill able
and nonrefill able bottles.
tThis is the amount all consumers who had purchased or are
projected to purchase their beverages in nonrefillable bottles
and cans without the tax would have to pay to maintain con-
venience under these tax rates.
higher labor requirements of a refillables system. These are
shown in Table 30.
(d) Investment.
The investment impacts of a low tax are expected to be
72
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Table 30. EMPLOYMENT IMPACTS ESTIMATED WITH A
HIGH TAX (5 CENTS) ON BEVERAGE CONTAINERS
(thousands)
Industry
Soft drink
Malt liquor
Wholesale beer
Retai 1 1 ng
Glass containers
Metal cans
Metals
Total
Gain
Loss
Net
1969
Actual
128.6
58.1
59.9
19.6
71.5
68.1
617.7
1,023.5
Expected
outcome*
141.2
61.3
74.5
50.0
55.8
38.6
602.4
1,023.8
Change
+12.6
+ 3.2
+14.6
+30.4
-15.7
-29.5
-15.3
+60.8
-60.5
+ 0.3
1976
Trend
147.7
62.0
70.9
11.1
76.8
86.3
617.7
1,072.5
Expected
outcome*
178.6
69.3
93.0
60.9
43.9
39.1
593.1
1,077.9
Change
+30.9
+ 7.3
+22.1
+49.8
-32.9
-47.2
-24.6
+110.1
-104.7
+ 5.4
Source: Research Triangle Institute.
*Beer and soft drink consumption is assumed to decrease 4 percent due to
the higher cost of convenience with a high tax.
negligible or nonexistent. The impacts under a high tax would be
significant. As shown in Table 31, they are estimated at $1.4
billion in writeoffs. New investment of about $1.2 billion would
be necessary to convert to a refillables-only system based on the
Midwest Research Institute data provided for various levels of
consumption.
(e) Tax revenue.
The impacts on tax revenues will only be significant for a
high tax. The revenue losses would be the same as those estimated
for a mandatory high deposit, i.e., about a $51-million reduction
in beer excise tax revenues due to the lower consumption expected
and tax writeoffs of $1.4 billion or $271 million annually over a
5-year period. See Table 32.
73
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Table 31. INVESTMENT IMPACTS ESTIMATED WITH HIGH TAX
(5 CENTS) ON BEVERAGE CONTAINERS
(millions)
Total writeoff New investment*
Soft drinks
Malt liquor
Wholesale beer
distribution
Retailing
Glass containert
Metal can
Metals
$ 181
169
-0-
-0-
161
550
300
$ 345
501
298
24
-0-
-0-
-0-
Total $1,361 $1,168
Source: Jeff Mai Hie, The National Economic Impact of a
Ban on Nonrefill able Beverage Containers, Midwest Research
Institute, Kansas City, 1971, pp. 23,73,75,76,78 and Research
Triangle Institute.
*These figures are 4 percent lower than the amounts
estimated if consumption had remained constant. MRI assumed
an 8 percent decline in consumption.
tTrippage of 15; MRI assumed a trippage of 8.
Table 32. BEER EXCISE TAX IMPACTS ESTIMATED WITH A HIGH TAX
(5 CENTS) ON BEVERAGE CONTAINERS
1969
Actual
Expected outcome
Change
1976
TFend
Expected outcome
Change
Consumpti on
(million barrels)
114.9
111.1
-3.8
145.5
140.7
-4.8
Tax*
(million)
$1,551.2
1,499.9
-51.3
$1,964.3
1,899.5
-64.8
Source: Research Triangle Institute
*Based on Federal excise tax of $9.00 per barrel and an
average State excise tax of $4.50 per barrel.
74
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Table 33. PERSONAL INCOME IMPACTS ESTIMATED WITH A HIGH TAX
(5 CENTS) ON BEVERAGE CONTAINERS
(millions)
Industry
Soft drink
Malt liquor
Wholesale beer
Retailing
Glass containers
Metal cans
Metals
Total
Gain
Loss
Net
1969
Actual
$834.1
578.8
470.7
113.8
189.4
260.0
144.7
$2,591.5
Expected
outcome
$915.8
610.7
585.4
290.1
75.5
0
0
$2,477.5
Change
+$81.7
+ 31.9
+114.7
+176.3
-113.0
-260.0
-144.7
+$404.6
-$518.6
-$114.0
1976
Trend
$956.0
617.6
557.1
64.4
317.1
416.4
233.0
$3,161.6
Expected
outcome
$1,158.4
690.4
730.8
353.6
78.4
0
0
$3,011.6
Change
+$202.4
+ 72.8
+ 173.7
+ 289.2
- 238.7
416.4
- 233.0
+$738.1
-$888.1
-$150.0
(f) Personal income.
Personal income losses and gains would be significant only
for the high tax since only this tax is expected to cause large
employment shifts. As shown in Table 33, until the displaced
workers could find new jobs, there would be a $114 million
reduction in personal income (1969 rate) annually since the created
new jobs, although more numerous than those lost, would be lower
paying.
4.2.6.4 Equity. A nonrefundable tax on beverage containers falls
on all beverage consumers regardless of whether or not they litter
empty containers. The purchasers of beverages in refiliable containers,
however, bear the smallest portion of the costs since the prices of
beverages in these containers would increase the least.
Equity could be improved if the tax were refundable to those who
did not litter. This would require the consumer to return the empty
container to a reclamation center. The operators of the reclamation
center would receive the. revenue from the government'upon evidence of
75
-------
having recycled the containers. The reclamation center could use some
part or all of the tax refund to encourage consumers to return empty
containers.
4.2.6.5 Administration. A tax on beverage containers could be
administered on a Federal, State, or local level.
All States and the District of Columbia currently tax beer and
several States tax soft drinks. Therefore, a large part of the
necessary administrative machinery for collecting the tax is already
available. For States which are not currently taxing soft drinks,
the general procedures used for collecting beer taxes can be applied.
The most common procedure used is for wholesalers to report beer sales
and pay the tax in the month following the sales. In some States,
however, the taxes are paid by crowns, lids, or stamps. The wholesaler
prepays the tax to the State revenue department which either issues
stamps or informs the crown or lid producing firm to release the
closures to the wholesalers. The crowns or lids usually carry a
statement indicating that the tax has been paid. This procedure, since
it requires prepayment, ties up wholesalers' money. In recognition of
this and also of the administrative burden placed on wholesalers, a
discount of 1 to 3 percent of the taxes is usually allowed. However,
most States have gone to the reporting system with only Alabama,
Georgia, Mississippi, and West Virginia expected to have the crowns
and lids system by the end of 1972.
A tax on the container would be a slight departure from present
practices but if employed on the State level should present no
significant administrative problem. The container manufacturers would
act in the same manner as crown or lid manufacturers currently do. They
would receive a release to ship containers to the brewers or bottlers
from each State's revenue department. A distinctive marking might be
put on the container as evidence that tax had been paid.
Disbursement of tax revenues to local areas for increased frequency
in litter collection has parallels in current revenue sharing practices
of government. The Federal government allocates revenues to States and
76
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local areas for education and many other special purposes. States
allocate revenues to local areas for education as well as highway needs
and other such programs. If desired, the revenues can be earmarked for
litter collection. Audits can be used to insure the funds are spent
as specified.
4.2.6.6 Type of Mechanism. A tax on beverage containers would
probably become part of the price of beverages and, therefore, it
would be a market-type mechanism which would insure that the beverage
consumers bear the social costs of littered containers. Because
beverage prices would increase, there would probably be a reallocation
of resources away from beverage containers. The reallocation would be
in response to a change in the quantity of beverages demanded as a
result of the higher prices which now reflect the social costs of
littered containers.
If the tax were refundable, it would encourage the economic
recycling of beverage containers. A market would exist because the
government would refund the beverage container taxes when the containers
were recycled.
4.2.6.7 Type of Approach. A tax on beverage containers could be
applied to other items appearing in litter; however, it may not be as
easy to apply to them. For example, paper is the largest component of
litter, yet it can occur in many forms: a cigarette pack, sheet of
newspaper, food wrapers, letters, junk mail, etc. Yet these items are
not as finite as beverage containers and, therefore, may be more
difficult to tax.
4.2.7 Proposal 7: Subsidies (Incentive)
A third type of incentive is a subsidy. Subsidies include the use
of tax credits, accelerated depreciation, tax exemptions, grants, loans,
and loan guarantees for the purpose of encouraging recycling. The
emphasis of the proposed subsidies has been on recycling and not on the
litter and solid waste aspects of beverage containers. The proposed
subsidies are intended to improve the economics of recycling and make it
a more viable alternative to the use of virgin materials. Although
subsidies will reduce the costs, or increase the revenues, of the
recycling companies once empty beverage containers are obtained and
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processed, they are not likely to influence the behavior of the consumer
who litters. Unless the subsidies are so large that the recyclers can
pay the consumers far more than the small amount that containers are
worth as raw materials, the behavior of those consumers who litter is
unlikely to be greatly influenced. Smaller payments than those necessary
to reduce the rate of littering may suffice, however, to encourage
scavenging from litter, and thus lead to a cleaner environment.
The size of the subsidy necessary to encourage scavenging from
litter has not been estimated. Subsidies are an inefficient and indirect
method of attacking litter. Furthermore, they may not even be the best
means to increase recycling. They could cause more resources than are
optimal--given current and anticipated free market prices—to go into
recycling rather than into virgin materials. They would further
distort resource allocation by causing more capital and less labor to
go into recycling than would occur without subsidies, since most
subsidies operate by reducing the cost of capital equipment. Subsidies
also present problems of administration since they are supposed to go
to companies that would not have made the expenditures without the
subsidy. However, that determination may be difficult. A final aspect
is that subsidies would probably have to be nationwide and administered
at the Federal level.
4.2.8 Proposal 8: Educational Campaign (Indirect Influence)
The first of three indirect influences is an increased eductional
campaign against littering designed to persuade consumers to
voluntarily reduce littering.
There is little data available on the effectiveness of educational
efforts to change people's behavior. About $50 million per year is
spent by Keep America Beautiful, Inc. (KAB), chambers of commerce, and
other civic organizations to discourage littering; these organizations
visit schools, distribute litterbags and litter baskets, and prepare
advertising. The impact of this effort is unknown. Despite these
efforts, there has been no thorough study to determine why and under
what conditions people litter. Such a study would appear to be a
requisite first step in a litter prevention program.
The amount of money that will be needed to significantly reduce
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Utter through education is probably much larger than is currently
spent. The beverage industries spend substantially more on advertising
than is spent on antilittering efforts. Much of the beverage
advertising is directed at selling the convenience of nonrefillable
beverage containers. The money spent educating people about the
dangers of smoking (without eliminating the habit) and encouraging
people to use seat belts (without convincing many people) demonstrates
the difficulty of changing public behavior. In fact, the group that
litters most, according to a Gallup poll,41 is the 21-35 year olds who
have been exposed more than any other group to antilitter messages
during their formative years.
The critical point about education of this type is cost-
effectiveness, and this cannot be readily determined.
4.2.9 Proposal 9: Enforcing Present Litter Laws (Indirect
Influence")
Because littering is illegal in all 50 States, more vigorous
enforcement of laws prohibiting litter may be a logical approach.
However, littering is done quickly and surreptitiously. To apprehend
the roadside litterer in the act of littering would require tremendous
numbers of policemen patrolling in automobiles. (Of course, the fear
of apprehension would deter many potential litterbugs.) To prosecute
and sentence offenders would require substantial increases in the size
of the judicial system. With the rate of serious crime rising so
rapidly, less and less attention is likely to be given to minor
antisocial actions such as littering.
The cost-effectiveness is also questionable. There are about 12
billion items of all types littered per year. If each patrolman
could catch and help prosecute (by appearing in court) 10 offenders
per day, he might prevent 1000 incidents per day or 250,000 items of
litter per year. The cost of training, equipping, supporting, and
paying a State patrolman probably is at least $20,000 a year. Thus the
cost of prevention would be $0.08 per item, roughly 4 times the current
average cost of removal.
4.2.10 Proposal 10: Research and Development (Indirect Influence)
The last proposal (or set of proposals) is research and
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development (R&D) on various aspects of the littered container problem.
R&D efforts would require time and offer no guarantee of a practical
solution.
One proposed solution is the development of a beverage container
that would disappear soon after it is used or littered but would not
degrade before the contents are consumed. Among several possibilities
being investigated are a water-soluble glass bottle that would dissolve
once the coating was removed (this container seems to be far in the
future) and a self-destructive container of plastic that would
disintegrate when exposed to the ultraviolet component of sunlight. A
new container is likely to cause severe dislocations in the container
industry. Such an R&D effort would have to be nationwide rather than
statewide or local. There would still be a residue of inert material
once the containers disintegrated. This type of container might also
encourage littering behavior.
Another R&D proposal is to study the economics of litter removal.
Cost relationships are not known. Information is needed, particularly
with the respect to the relationship of costs to the organization of
resources, to the frequency of pickups, to the type of terrain, and to
the type of litter. More frequent pickups coupled with better removal
techniques and mechanical equipment might significantly improve the
appearances of the environment at a small additional cost. Funds would
still be needed to perform the R&D and to implement the results.
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Chapter 5: RECOMMENDATION FOR A GOVERNMENTAL POLICY
5.1 Introduction
Government action is justified when three conditions exist: (a)
general welfare is being reduced or threatened, (b) individuals and
institutions outside government cannot or will not take effective
corrective action, and (c) there is an available public policy that may
reasonably be expected to be effective, to be equitable, and to provide
benefits in excess of its cost. This study has established that litter
does reduce the quality of the environment and thereby creates
substantial social costs which are borne by all members of society.
The beverage container can be identified as the most offensive element
in litter. Also, there is every indication that beverage containers will
continue to be littered, probably at a substantially greater rate in
the future due to growth in beverage consumption and shifts in
containerization away from refillable bottles toward the more litter-
prone nonrefiliable bottle and can.
The market system and private antilitter campaigns do not show signs
of eliminating litter, and State and local governments do not have the
resources to respond to the demand for a cleaner environment. Additional
funds to collect littered containers, if made available from general
revenue sources, could lead to a decrease in other expenditures or
higher general taxes paid by all members of society. A government
policy is therefore justified for dealing directly with the beverage
container provided that the cost-benefit relationship and performance in
terms of the other criteria justify its implementation. Such a specific
policy on the beverage container should not, however, preclude attempts
to deal with other littered items.
Examination of the broad policy alternatives leads to the
conclusion that neither by imposing restrictions nor by programs using
indirect influence would there be any significant probability of
reducing the social costs of beverage containers. Incentives, however,
do offer a satisfactory alternative. The choice from among the
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available incentives is between mandatory deposits and a tax on all
beverage containers.
Only a deposit level high enough to insure a refillables system
of beverage containerization is predictable in terms of benefits and
costs. The level of deposit necessary to insure this outcome is
unknown. A deposit level of 10 cents has been assumed as necessary to
insure this outcome. The actual level necessary may be somewhat lower
or higher depending on geographic location.
Two tax levels were analyzed, a low of 0.5 cents and high of 5.0
cents. The low tax seems more desirable than the high tax, at'this
time, because the high tax, without provisions for refundability,
raises beverage prices and generates revenues substantially in excess of
the amounts necessary to collect the containers that continue to be
littered. The mandatory high deposit and the low tax are compared in
the next section.
This chapter concludes with a recommendation for a governmental
policy on the beverage container problem.
5.2 Evaluation of a Mandatory High Deposit and a Low Tax
5.2.1 Predictability
Both a mandatory high deposit and a low tax on containers have
reasonably predictable impacts on beverage prices and containerization.
The impact of the tax on consumption can also be predicted, but the
impact of a mandatory deposit on consumption is much less certain
because of the lack of information available on the demand for
convenience. The impact on consumption, however, is expected to be
substantially greater with a mandatory high deposit than with a low tax
since the high deposit significantly raises the price of convenience.
5.2.2 Benefits
Both the mandatory high deposit and low tax would subtantially
reduce the population's exposure to littered containers, but by different
approaches. The high deposit is expected to greatly reduce littering
and possibly stimulate scavenging while the tax is expected to generate
funds to permit more frequent collection of littered containers. The
mandatory high deposit will probably result in an environment with
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fewer littered beverage containers than will the tax. However, no
direct comparison between the two policies is possible because of
insufficient information on current collection frequencies and the
number of littered containers seen annually by the population. The low
tax will result in a cleaner environment rf the revenues are used for
improved litter collection, but there will still be beverage containers
on the ground at some times, because pickups would be made at intervals
rather than continuously. The tax offers the advantage that other items
could be picked up along with the beverage containers, whereas the
deposit will eliminate beverage containers from litter but not affect
the other items.
At 1969 rates, the mandatory deposit could save about $43 million
in litter collection costs and about $93 million in solid waste costs
assuming the proportional relationships discussed in Chapter 3. The tax
will generate revenues of $219 million that can be used to do a better
job of collecting litter but would not affect solid waste costs.
5.2.3 Costs
5.2.3.1 Beverage Prices. A tax will cause prices of beverages in
nonrefiliable bottles and cans to increase by the amount of the tax,
while beverages in refillables should be unaffected since the tax
would be distributed over several fillings.
The mandatory high deposit will probably result in lower average
prices for beverages since nonrefi11 able bottles and cans are expected
to be no longer available.
5.2.3.2 Cost of Convenience. The mandatory high deposit of 10
cents will raise the cost of convenience about 9 cents for beer and 8
cents for soft drinks over what consumers are currently paying. The low
tax of 0.5 cent would raise the cost of convenience by the amount of the
tax, 0.5 cent, for both beverages. Although there are no data
available to calculate the loss in consumer welfare as a result of a
higher cost of convenience, the losses due to a mandatory high deposit
are anticipated to be substantial.
5.2.3.3 Employment. The mandatory high deposit and consequent
shift to an all-refillables system will cause a reduction of 60,500
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employees (based on 1969 figures) in some industries and an increase of
60,800 in other industries connected with beverages. The large shifts
may cause temporary unemployment and other hardships in the affected
areas. The low tax will not cause significant employment changes in the
beverage industries but may cause an increase in litter collection
employment.
5.2.3.4 Investment. The low tax is not expected to affect
investment. The mandatory high deposit, however, may result in tax
writeoffs of $1.4 billion of equipment made obsolete by the expected
shifts to an all-refillables system. This shift will require new
investment of about $1.2 billion.
5.2.3.5 Tax Revenues. The mandatory high deposit will reduce
beer excise tax revenues about $51.3 million (1969) due to the expected
4 percent drop in beer consumption. This would be an annual loss of
about $34 million on a Federal level and an average of $340,000 for
every State. There will also be tax writeoffs of $1.4 billion, or $271
million annually over a 5-year period.
5.2.3.6 Personal Income. The employment shifts caused by the
mandatory high deposit will result in a net loss of income for persons
employed in the affected industries. This is because the refillables
system is more economical. This means that beverage consumers will not
have to pay as much for these beverages and may use these excess funds
to make other purchases. These purchases will then generate personal
income in other industries. The low tax will not significantly- affect
personal income.
5.2.4 Equity
Both a mandatory deposit and a tax would be inequitable to a
degree, in that the burden would fall on all beverage consumers, not
just those that litter their empty containers.
5.2.5 Administration
Both mechanisms are relatively easy to administer with the tax
being the easier. One weakness of the high deposits is the possible
migration of containers from low- to high-deposit areas. Spot checks
would have to be made to insure that the proper deposits were being
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collected and refunded. The collection of the tax can probably be
handled easily with procedures existing in most States. Allocation of
the funds to promote better litter collection might be a greater problem.
The difficulty is to insure that the funds are actually used for litter
collection, and are a net addition to existing expenditures for this
purpose.
5.2.6 Type of Mechanism
Both a tax and a mandatory deposit are market-type mechanisms which
will be included in the price of the beverage.
5.2.7 Type of Approach
The tax appears to have more potential applications to environmental
problems, especially litter, than a deposit.
5.2.8 Summary
In terms of the costs and benefits of the low tax and mandatory
high deposit, the deposit probably has greater benefits but its costs are
significantly greater than those of a tax. Using only the costs, which
are permanent reductions in welfare and not real locations of economic
activity, the comparison is between the incremental benefits of a
deposit over a tax (which are not known) and the incremental costs of
convenience (about 8 cents per container).
For most of the other criteria (predictability, administration,
equity, type of mechanism, type of approach), the tax appears superior
to the mandatory deposit.
5.3. Recommendations for Governmental Policy
It is recommended that a tax on beverage containers be employed
to deal with the beverage container problem. The tax should reflect the
social costs of littered containers. This policy would be the most
predictable, least-cost, most equitable, and easiest of the available
alternatives to administer. It may have applicability to other
environmental (especially litter) problems.
Since beverage consumption, container types, littering habits,
citizen values, and litter collection costs all vary from area to area,
the social costs incurred by society will also vary. For this reason,
and also for reasons of administratibility, the tax should be imposed at
the State level. Each State should determine its appropriate tax rate,
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based on the magnitude of its beverage container problem. It appears,
however, that most tax rates should be from 0.5 to 1.0 cent per
container.
5.4 Recommendations for Further Research
Two additional aspects of the beverage container were considered,
but the scope of this study precluded their complete evaluation.
First, refundable taxes on products may be an effective way to
encourage solid waste recycling, thereby reducing the solid waste
management burden. Such taxes could be refunded to organizations
which demonstrated that they had reused or recycled a potential
waste product. The recycling organization could use the rebate from
the government as a basis for providing an incentive to consumers to
return products for recycling. For example, the aluminum companies
currently pay about 0.5 cent for every aluminum can received from
consumers. If the companies received from the government the tax paid
by the consume)—say, 0.5 cent—they could offer about 1 cent per can,
thereby encouraging still more consumers to return their empty
aluminum cans for recycling. The administratibility of such a
proposal is, however, unknown and would have to be studied.
Second, the environmental implications of discarded beverage
container closures or the packaging used when several containers (for
example, the six-pack) are sold together have not been explicitly
examined. Most consumers probably do not routinely litter their empty
beverage containers, but they may routinely litter the containers'
closures. These closures, such as bottle caps, pull-tabs, or tear
rings may cause insidious, long-term impact on the environment due to
their ubiquitous nature and the difficulties involved in collecting them.
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Chapter 6: REFERENCES
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96
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99
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Appendix A: PENDING LEGISLATION
A.I Introducti on
The United States Brewers Association has provided tabulations of
the pending legislation on beverage containers. The legislative proposals
as of June 1971 are summarized in Table A-l, and listed in Table A-2.
Table A-l. SUMMARY OF LEGISLATION FOR CONTROLLING
BEVERAGE CONTAINERS, 1969-71, BY CATEGORIES
Category Number of bills*
Prohibition of Containers 213
Total Nonreturnables 172
Nonreturnable Glass 18
Nonreturnable Metal 10
Any Nonreturnables 144
Aluminum Content 6
Polyvinyl Chloride Content 4
Nondestructibles 12
Nondegradable 3
Nonb.iodegradable 8
Noncombustible 1
Disposal Unless Recyclable 5
Pull-Tops 5
Sold in Vending Machines 1
Other 8
Regulations 174
Deposits and Refunds 93
2 cents 8
3 cents 2
4 cents 3
5 cents 46
6 cents 2
JO cents 7
Amount not Specified 25
Recycle or Reclaim 7
Tax 67
Tax Level:
On Manufacturer 3
On Wholesaler 15
On Retailer 10
Type of Container:
Aluminum 1
Beer 3
Soft Drink Bottles 2
No-Deposit Bottles 2
Nonreturnable 40
Returnables 1
All Containers 4
—continued
101
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Table A-l (continued). SUMMARY OF LEGISLATION FOR CONTROLLING
BEVERAGE CONTAINERS, 1969-71, BY CATEGORIES
Category Number of bills*
Amount of Tax:
1/4 cent 1
1/2 cent 1
1 cent 20
2 cents 5
3 cents 1
5 cents 8
10 cents 2
1-3 cents 2
Fine or Imprisonment 4
Permits to Sell 3
Study Committees (R&D) 41
Degradable Package Development 3
Recycle Process 12
Nonreturnables 10
Environmental Improvement 16
*Total number of bills in this table is greater than total bills pre-
sented in Table A-2 since many bills specified more than one category of
control.
102
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Table A-2. PENDING LEGISLATION:
SELECTED STATE AND FEDERAL LAWS PROPOSED AS OF JUNE 1971*
Legislative body
Bill
Characteristics
U.S. Congress H.R.399 Establishes a Joint Congressional
Committee on Environmental Quality.
H.R.665 Provides for a study of the
decomposability and destructibility
of packaging and other materials.
H.R.948 Bans beer and soft drink containers
that are sold in interstate commerce
on a no-deposit, no-return basis.
H.R.1083 Establishes economic incentives by
industrial accessed disposal charges
for development of degradable packaging
and for recycling.
H.R.1149 Levies an excise tax of 2$ to 25
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
U.S. Congress
(cont.)
Alaska
Arizona
H.R.8005 Provides for Federal procurement of
products manufactured from recycled
materials.
H.R.8006 Same as H.R.8005.
H.R.8151 Establishes a national system of solid
waste management.
H.R.8370 Imposes a retailers' excise tax on
nonreturnable beer and soft drink cans.
H.R.8960 Prohibits interstate commerce of
nonreturnable beverage containers on
which there is no reasonable money
deposit.
H.R.9083 Same as H.R.8960.
H.R.9297 Imposes a retailers' excise tax on
nonreturnable bottles and cans.
H.Res.39 Creates a House Standing Committee on
the Environment.
H.Res.42 Same as H.Res.39.
H.Res.51 Same as H.Res.39.
H.Res.174 Same as H.Res.39.
H.J.Res.260 Same as H.R.339.
H.J.Res.434 Same as H.R.339.
S.282 Requires national standards and charges
for packaging that is not easily
disposable or is not recycled.
S.I377 Requires reasonable refundable money
deposit on any nonreturnable beverage
containers in interstate commerce.
S.J.Res.14 Amends the Constitution to provide for
"right to a decent environment".
S.O.Res.15 Designates "Earth Week".
S.J.Res.17 Establishes a joint congressional
committee on the environment.
S.J.Res.22 Designates "Cleaner Air Week".
H.B.183 Imposes a tax of 1/20 of 1% of gross
receipts of manufacturers, wholesalers,
and retailers of beer and other products.
S.B.77 Requires a minimum 5tf deposit on all
beer and soft drink containers.
S.B.87 Imposes a 1$ tax on paper or metal
beverage containers, and a 2
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Ari zona
(cont.)
Arkansas
California
Colorado
Connecticut
S.B.74 Requires a deposit of 2£ to 104 on all
beer and soft drink containers.
S.B.90 Requires a 104 deposit on all beer and
soft drink containers except paper.
H.B.5 Requires a 54 deposit on all beer, soft
drink and liquor containers.
H.B.34 Requires a It tax on nonreturnable soft
drink and beer containers.
H.C.Res.26 Urges regulation or restriction of
nonreturnable beverage containers.
H.B.635 Requires a 54 deposit on all beer and
soft drink containers except paper.
S.B.25 Imposes a 5/6 of 14 tax on nonreturnable
metal soft drink and beer containers.
A.B.163 Prohibits the sale of beer and soft drinks
in nonreturnable containers.
S.B.I 18 Requires a 54 deposit on all beer and soft
drink containers unless the container is
biodegradable,
S.B.213 Imposes a 14 tax on each nonreturnable
beverage container.
H.B.I263 Requires a 54 deposit on all beer and
soft drink containers.
S.B.62 Prohibits the sale of products in
disposable materials containers unless
producer files plan for recycling or reuse
of the materials.
S.B.100 Requires beer and soft drink containers be
part of a recycling or reusing program.
H.B.5035 Creates a committee to study banning or
taxing the use of nonreturnable containers.
H.B.5450 Bans the use of nonreturnable,
nondegradable containers for beer and
carbonated beverages.
fLB.5809 Bans the use of nonreturnable,
nonbiodegradable beverage containers.
H.B.5810 Requires a minimum 54 deposit on
nonbiodegradable beer and soft drink
containers, and a 14 tax on nonreturnable,
nonbiodegradable beverage containers.
H.B.5812 Prohibits nonreturnable beverage containers
which are nondegradable or noncorrosive.
H.B.6595 Provides for a committee to study the
problem of disposable containers.
H.B.7898 Requires the retail sale of milk and
noncarbonated soft drinks be in returnable,
reusable bottles.
H.B.8652 Prohibits the retail sale of beer, soft
drinks and milk in nonreturnable containers.
H.B.8807 Prohibits the sale of beverages in
nonreturnable bottles.
105
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Table A-2 (continued)
Legislative body Bill
Characteristics
Connecticut
(cont.)
Delaware
Florida
Georgia
Guam
Hawaii
S.B.16
S.B.136
S.B.307
S.B.389
S.B.I 646
H.B.5
H.B.101
S.B.I 56
H.B.322
H.B.499
H.B.I 61 6
H.B.919
Bill #444
H.B.88
H.B.89
H.B.232
H.B.278
H.B.298
Prohibits the sale of beverages in
nonreturnable glass bottles, or
noncorrosive cans.
Prohibits the use of nonreturnable,
nondegradable beverage bottles.
Establishes a committee to study the
feasibility of banning or taxing
nonreturnable cans and other containers.
Requires a tax on nonreturnable beverage
bottles of 2i to 5*.
Prohibits the sale of nonreturnable or
nonbiodegradable beverage containers.
Requires a deposit of 2$ on beer, soft
drinks, and fruit juices in glass, metal,
and plastic containers.
Prohibits the sale of soft drinks and beer
in nonreturnable containers.
Requires a tax of H on each 16 oz. of
soft drinks sold in a bottled container.
Requires a 5£ deposit on beer and
carbonated beverages sold in hermetically
sealed nonreturnable containers.
Requires a tax of l/2tf on each can and
nonreturnable bottle of beer and carbonated
beverages .
Requires a H deposit on glass and metal
containers of soft drinks, beer, and wine.
Prohibits sale of beverages in
nonreturnable glass bottles unless there
is a monetary deposit on containers.
Prohibits the sale, manufacture or use of
nonbiodegradable containers for soft drinks
and beer.
Provides for counties to make arrangements
for removal and recycling of metal trash.
Prohibits the sale of nonreturnable glass,
plastic, or metal beverage containers which
have no reasonable money deposit.
Prohibits the sale, furnishing or offering
for sale of aluminum containers for any
purpose.
Provides for a deposit of 3£ on glass
containers and H on cans; also a retailer
tax credit of 5% of the gross sales price
of a ton of returned glass or can containers,
if such are stored until claimed.
Prohibits the sale, furnishing or offering
for sale of aluminum beverage cans.
106
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Table A-2 (continued)
Legislative body Bill
Characteristics
Hawaii
(cont.)
Idaho
Illinois
Indiana
Iowa
Kansas
Louisiana
Maine
H.B.300 Prohibits all nonreturnable beverage
containers on which no reasonable money
deposit is required.
H.B.1458 Levies a 5$ surfharge on each nonreturnable
container.
H.B.I468 Levies a tax of 5$ on each nonreturnable
glass, metal or plastic container.
H.B.230 Provides for a tax of U on each 7 oz of
soft drinks or beer sold in nonreturnable
containers. Minimum deposit of 2
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Maryland
Massachusetts
H.B.51 Prohibits the sale, distribution,
manufacture, or use of beer, soft drinks,
fruit juices or mineral water in
nonreturnable containers.
H.B.224 Imposes a 5tf tax on nonreturnable beer
and soft drink containers which do not have
a minimum 5tf deposit.
H.B.492 Allows political subdivisions to levy a 5tf
tax on nonreturnable beverage containers.
H.B.642 Requires that all containers not made of
glass or metal be completely biodegradable.
H.B.643 Requires that all metal and glass products
sold after 1/74 be composed of twice the
amount reclaimed materials as in 12/71.
H.B.I295 Requires retailers to offer for sale the
same type of beverages in returnable
containers as are available in nonreturnable
containers.
S.B.40 Requires a minimum 5tf deposit on all beer,
fruit drink, mineral water, and carbonated
beverage containers.
S.B.460 Same as H.B.643.
S.B.461 Requires all nonmetal or glass containers
be biodegradable.
S.B.762 Requires retailers to offer under
substantially the same conditions, the same
beverages in returnable containers
offered in nonreturnable containers.
S.Res.87 Requests all State facilities to use
returnable bottles whenever possible.
H.B.593 Authorizes municipalities to impose a
maximum 2$ surcharge on nonreturnable
plastic or aluminum beverage containers.
H.B.696 Requires a minimum 10$ deposit on all glass
or metal beer and carbonated beverage
containers.
H.B.697 Requires a deposit of 2 to 5* on all
beverages In nonreturnable glass containers.
H.B.899 Same as H.B.696.
H.B.I485 Prohibits the sale or distribution of soft
drinks and malt beverages in nonreturnable
bottles.
H.B.1486 Prohibits the sale or distribution of soft
drinks and malt beverages in cans or
nonreturnable bottles.
H.B.I487 Requires a 2i deposit on soft drink and
malt beverage bottles.
H.B.1488 Requires a 2$ deposit on soft drink and
malt beverage cans or bottles.
H.B.1489 Prohibits the sale or storage for sale of
any beverage in nonreturnable glass
containers.
108
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Table A-2 (continued)
Legislative body Bill
Characteristics
Massachusetts
(cont.)
Michigan
H.B.2927 Imposes a tax of a vendor's gross receipts
from the retail sales of beverages in
nonreturnable glass or metal containers
(minimum lOtf deposit for returnables).
H.B.2969 Prohibits the sale of jeer or carbonated
beverages in metal, plastic, or glass
nonreturnable containers.
H.B.3170 Prohibits the sale of any soft drink in
nonreturnable bottles or nonrecycleable
cans.
H.B.3364 Requires 5£ deposit on all scalable
containers of nonalcoholic and malt based
beverages except fruit juices or dairy
products.
H.B.4516 Imposes an excise tax of 2i for each
nonreturnable beverage container, exempting
milk, water, and fruit and vegetable juices.
H.B.4554 Prohibits the sale of beer and soft drinks
in nonreturnable glass and metal containers.
H.B.4704 Requires H excise tax on each
nonreturnable bottle or aluminum can sold.
H.B.4757 Prohibits the sale of carbonated beverages
and beer in nonreturnable glass or metal
containers.
H.B.4906 Provides for 2$ to 6£ excise tax on each
nonreturnable bottle or can which is
nonbiodegradable.
H.B.5321 Increases the scope of a special commission
established to investigate the study the
reuse of solid waste.
S.B.279 Prohibits the sale of carbonated beverages
or beer in nonreturnable glass or metallic
containers (minimum 1Q£ deposit).
S.B.285 Same as S.B.279.
S.B.323 Bans the use of nonreturnable bottles in
wholesale or retail sales.
S.B.330 Bans all closed packaging containers of all
metal, glass, or plastic that are not
redeemable or part of a planned recycling
process.
S.B.I 151 Permits the taxation of nonreturnable
containers.
S.B.1153 Imposes a U tax per pound on nonreturnable
packaging or containers.
H.B.4152 Requires merchants that sell a brand of
beer or soft drinks to redeem that brand's
returnable bottles.
H.B.4159 Requires wordage on beverage or food
containers: "Litter costs tax dollars-
please put this container in a trash
receptable."
109
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Michigan
(cont.)
Minnesota
Mississippi
H.B.4170 Requires a minimum 6* deposit on all glass
beer and soft drink containers.
H.B.4685 Requires a minimum 10<£ deposit on all
sealed beer and soft drink containers.
S.S.69 Levies a W tax on glass, tin, steel, and
aluminum containers in which any drink,
commodity, or product is sold.
S.B.214 Requires a lOtf deposit on all soft drink
and beer containers.
S.B.329 Requires a minimum 6<£ deposit on all beer
and carbonated beverage bottles.
S.Res.20 Bans the sale of beer in disposable
containers.
H.B.243 Requires a 5i minimum deposit on all beer
and soft drink containers.
H.B.382 Requires 5t deposit on sealed containers of
beer, soft drinks, and liquor.
H.B.673 Prohibits nonreturnable containers of 10%
or more aluminum.
H.B.1031 Prohibits the sale of beer and soft drinks
in nonreturnable cans (minimum 5tf deposit).
H.B.I054 Requires 5
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Mississippi
(cont.)
Missouri
Montana
Nebraska
Nevada
New Hampshire
H.B.363 Prohibits manufacturers and distributors of
soft drinks and beer of 4% or less alcohol
from using any nonreturnable containers.
H.B.92 Levies 1$ tax on all nonreturnable
aluminum beverage containers for each 24 oz.
H.B.184 Prohibits the sale or distribution of any
beverage in a scalable metal container,
excepting steel or tin-plated steel.
H.B.251 Requires 5tf minimum deposit on beer and
soft drink containers.
H.B.460 Requires 5
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
New Jersey
New Mexico
New York
A.B.2212 Requires 5$ minimum deposit on all beverage
containers.
S.B.2150 Requires 5£ deposit on beer and carbonated
beverage containers sold at retail.
S.B.2284 Establishes a State Council on Recycling.
S.B.322 Requires 2
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
New York
(cont.)
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
S.B.3326 Same as A.B.3492.
S.B.4984 Prohibits nonreturnable beverage
containers and levies a 10£ tax on
containers.
S.B.6634 Same as A.B.7758.
S.B.177 Requires 2t deposit on soft drink and
beer bottles.
H.C.Res.3035 Urges the use of returnable beer and soft
drink containers.
H.B.119 Requires 5t deposit at first sales level,
or Itf tax at retail level on beer, soft
drink, and dairy products containers.
H.B.473 Prohibits the sale of soft drinks in
nonreturnable or disposable metal or glass
glass containers.
H.B.627 Requires minimum 5
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Pennsylvania S.B.823 Prohibits the sale of soft drinks and beer
(cont.) in nonreturnable containers.
S.Res.25 Creates a 5-member Senate Bipartisan
Committee to study the nonreturnable
container problem.
Puerto Rico H.B.1143 Permits shipment of malt beverages into
Puerto Rico in containers of 1000 gal.
or more.
S.B.868 Same as H.B.1143.
Rhode Island H.B.1013 Creates a special legislative commission
to study establishing a uniform container
for packing foodstuffs and beverages.
H.B.1061 Requires 10£ minimum deposit on all beer
and carbonated beverage glass or metal
containers.
H.B.I236 Provides for a five-mill tax on
nonreturnable bottles sold or held for
sale.
H.B.I673 Levies a 2tf tax on nonreturnable liquid
beverage containers.
H.B.2451 Prohibits the sale of all beverages in
nonretrunable bottles or containers.
S.B.174 Prohibits the use of nonreturnable glass
or metal beer and carbonated beverage
containers.
S.Res.556 Creates a special legislative commission
to make findings and recommendations on
nonreturnable containers of all types.
S.Res.648 Creates a special legislative committee
to study recycling glass and metal
containers and their effect on the
environment.
South Dakota S.B.193 Prohibits the sale, manufacture, or
delivery of nonreturnable glass, plastic,
or metal beverage containers which have
no money deposit.' Bans cans with pull-
top tabs.
Tennessee H.B.969 Levies a H tax on the sale of
nonreturnable soft drink and alcohol
containers.
S.B.845 Same as H.B.969.
Texas H.B.81 Imposes a 2£ tax on nonreturnable beer
and soft drink containers.
H.B.94 Prohibits the sale of any beverage in a
disposable nonreturnable glass container,
except milk, fruit juices, wine, liquor,
or biodegradable glass containers.
H.B.813 Requires those sellers of nonreturnable
containers to pay refunds for the return
of nonreturnable beverage containers.
114
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Table A-2 (continued)
Legislatii/e body Bill
Characteristics
Utah
Vermont
Washington
West Virginia
Wisconsin
LOCAL ORDINANCES
Alabama,
Satsuma
H.B.281 Requires 3£ deposit on glass soft drink
containers, and 5
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Arizona,
Scottsdale
Tucson
California,
Alameda Co.
Garden Grove
Modesto
Novato
Redlands
Ventura
Azusa
Belmont
Claremont
Glendora
Livermore
Pasadena
Riverside
San Ansel mo
San
Bernardino
San
Francisco
Santa Barbara
Ordinance
Ordinance
Resolution
Resolution
Ordinance
Ordinance
Ordinance
Resolution
Ordinance
City Council
Ordinance
Ordinance
Ordinance
Prohibits nonreturnable beer and soft
drink containers.
Prohibits nonreturnable beer and soft
drink containers.
Urges the legislature to adopt and enact
legislation taxing nonreturnable containers
of beer, soft drinks, and alcoholic
beverages .
Urges legislature to enact statewide
mandatory deposit on nonreturnable and
nonbiodegradable containers.
Concerns recycling.
Prohibits nonreturnable containers.
Prohibits nonreturnable beer and soft drink
containers.
Requests industry to investigate recycling
and anti litter programs.
Prohibits nonreturnable beer and soft
drink containers.
Appointed committee on ecology.
Prohibits nonreturnable beer and soft
drink containers.
Prohibits the sale of beer and soft drinks
in nonreturnable containers.
Prohibits the sale of beer and soft drinks
in nonreturnable containers.
South
Pasadena
South San
Francisco
Colorado,
Boulder
Delaware,
Elsmere
Ordinance Requires retailers to market beverages in
returnable containers substantially
matching those sold in nonreturnable
containers.
Ordinance Bans nonreturnable metal and glass
containers in which beer and soft drinks
are sold.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beer and soft drink
containers.
116
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Table A-2 (continued)
Legislative body Bill
Characteristics
Florida,
Sarasota
Illinois,
Chicago
Highland Park
Urbana
Woodstock
Indiana,
Elkhart
South Bend
Iowa,
Des Moines
Iowa City
Kansas,
Manhattan
Maryland,
Baltimore
Bowie
Howard Co. Ordinance
Prince George
and Ordinance
Montgomery
Counties
Rockville Ordinance
Massachusetts,
Andover
Bedford
Fitchburg
Marlboro
Michigan,
Dearborn
Detroi t
Ordinance Prohibits nonreturnable beer containers
of metal or glass.
Ordinance Prohibits nonreturnable beverage bottles.
Ordinance Prohibits nonreturnable containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beverage containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beverage containers.
Ordinance Prohibits nonreturnable soft drink and
beer containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers of glass or metal.
Bill 1379 Taxes nonreturnable beverage containers
of 1* to 2t.
Ordinance Requires a minimum 5$ deposit on all beer
and soft drink containers of glass, metal
and plastic.
Prohibits nonreturnable beer and soft
drink containers without a 5<£ minimum
deposit.
Prohibits the possession or sale of
nonreturnable beverage containers on park
property in the counties.
Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits beverages sold in nonreturnable
glass bottles.
Ordinance Prohibits nonreturnable containers.
Ordinance Requires a 5
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Michigan (cont.),
Ingham Co.
Kalamazoo Co.
Lake Co.
Livonia
Oakland Co.
Southgate
Sterling
Heights
Troy
Wayne City
Minnesota,
Bloomington
Crystal
Deephaven
East Bethel
Minneapolis
Princeton
St. Louis
Park Ordinance
Missouri,
Creve Coeur Bill 568
Florissant
St. Charles
St. Louis
Montana,
Missoula
Ordinance Prohibits nonreturnable containers.
Ordinance Prohibits nonreturnable beer and soft
drink containers.
Ordinance Prohibits the sale of nonreturnable
beverage containers.
Ordinance Prohibits the sale of nonreturnable
beverage bottles.
Ordinance Prohibits nonreturnable containers.
Ordinance Prohibits nonreturnable bottle, can,
and paper cup containers.
Ordinance Prohibits the sale of carbonated and
alcoholic beverages in nonreturnable
glass and metal containers.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable glass containers.
Ordinance Prohibits nonreturnable beer and soft
drink glass bottles.
Ordinance Prohibits nonreturnable beverage
containers.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable containers.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable containers.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable containers.
Ordinances Prohibit nonreturnable cans and bottles,
and require 1£ to 3
-------
Table A-2 (continued)
Legislative body Bill
Characteristics
Montana,
Missoula
(cont.)
Nevada,
Clark Co.
New Jersey,
Edgewater
Irvington
Newark
Princeton
West Mil ford
New York,
Buffalo
Erie Co.
Ordinance
Ordinance
Ordinance
Ordinance
Ordinance
Ordinance
Ordinance
Ordinance
Ordinance
New York City Bill 64
Bill 136
Bill 341
North Carolina,
Salisbury Ordinance
Ohio,
Akron Ordinance
Barberton Ordinance
Cincinnati Ordinance
Worthington Ordinance
Pennsylvania,
Philadelphia Resolution
Requires a 5t deposit on beer and soft
drink nonreturnable containers.
Levies It tax on each can or bottle of
beer sold at wholesale.
Prohibits the sale of beer and soft
drinks in nonreturnable containers.
Prohibits the use of nonreturnable
containers for all types of products.
Prohibits soft drink and beer
nonreturnable containers.
Prohibits nonreturnable beer and soft
drink containers.
Prohibits nonreturnable beer and soft
drink containers.
Taxes nonreturnable bottles.
Prohibits the sale, distribution, or
exchange of nonreturnable beer and soft
drink containers.
Prohibits the sale or distribution of
beverages in any glass bottle or jar,
the mouth of which measures less than a
2 inch diameter.
Prohibits the sale of beverages in
containers without a 10<£ deposit for
bottles and a 5i deposit for metal and
plastic containers.
Prohibits nonreturnable beverage
containers.
Prohibits nonreturnable beer and soft
drink containers.
Prohibits nonreturnable beer and soft
drink containers.
Prohibits the sale of beer and soft
drinks in nonreturnable containers of
metal or glass.
Prohibits beer and soft drink
nonreturnable containers.
Prohibits nonreturnable beer and soft
drink containers.
Investigates the possible elimination or
control of nonreturnable beverage
containers.
119
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Table A-2 (continued)
Legislative body Bill
Characteristics
Rhode Island,
Providence
Vermont,
Northfield
Virginia,
Loudoun Co.
Washington,
Pullman
Wisconsin,
Madison
Milwaukee
Richland Co.
Wyoming,
Casper
Ordinance Prohibits nonreturnable soft drink and
beer containers.
Resolution Prohibits the sale of beer and soft
drinks in nonreturnable bottles.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable containers.
Ordinance Requires a 5£ minimum deposit on beer
and soft drink containers.
Ordinance Requires the sale of beer and soft drinks
in returnable as well as nonreturnable
containers.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable containers unless
also offered by the seller in reusable
containers.
Resolution
19 Prohibits retail sale of soft drinks and
beer in nonreturnable bottles.
Ordinance Prohibits the sale of beer and soft
drinks in nonreturnable containers unless
also offered for sale in returnable
containers.
120
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Appendix B: BEVERAGE CONSUMPTION AND CONTAINERIZATION TRENDS
B.I Introduction
Beverage consumption and containerization trends were analyzed
and projected in order to provide a basis for identifying probable
future trends in the beverage container problem. Since beverage
containerization is related to the consumption of beverages, the
trends in beer and soft drink consumption were examined in some
detail. Consumption was then converted to fillings and finally to
the various types of containers.
Projections in beverage consumption and containerization were
made for 1976, extrapolating data from 1955 to 1969. Consumption
equations were estimated using income and the population age distri-
bution as explanatory variables. Containerization was projected
based on trends in container size and the proportions of the various
types of containers.
B.2 Summary
To a large extent, the per capita growth for any one beverage
must come at the expense of other beverages. The age composition
of the population plays a significant role in determining the growth
in the consumption of a beverage since tastes vary by age as shown
below.
Beverages Preferred
Age Group
Under 5 years
5-19
20-34
35-64
65 and over
First
milk
soft drinks
beer
liquors
coffee
Second
soft drinks
milk
soft drinks
coffee
liquors
Third
fruit juice
fruit juice
coffee
soft drinks
soft drinks
As developed below, per capita consumption of soft drinks and
beer is expected to be 6,300 ounces annually by 1976, 26 percent
above 1969's value. This projected growth is based on projections
of economic and demographic trends and expectations of continued
121
-------
Table B-l. SUMMARY OF BEVERAGE CONSUMPTION AND
CONTAINERIZATION TRENDS
1955 1969 1976
Soft Drinks
Cases (billions) 1.2 2.9 4.2
Containerization (billions)
Refillable bottles* 31.4 29.7 16.8
Nonrefillable bottles 0.2 6.4 12.9
Cans 0.3 11.8 26.3
Beer
Barrels (millions) 85.5 114.9 145.5
Containerization (billions)
Refillable bottles* 14.4 11.3 8.5
Nonrefillable bottles 1.2 6.8 11.7
Cans 7.4 16.7 24.8
Source: Historical data, Glass Containers Manufacturers Institute,
Inc., Glass Containers, 1970; Can Manufacturers Institute, Inc.,
Annual Report: Metal Can Shipments, 1969; projections by Research
Triangle Institute.
*Fil1ings.
intensive marketing efforts. Fillings (Containerization) are expected
to be about 101 billion, 75 percent of which will be in one-way
containers as shown in Table B-l.
B.3 Soft Drink Consumption
B.3.1 General
Soft drink production has a long history reaching back to the
introduction of carbonated water in England in the latter half of
the 18th century. Today, soft drinks are ubiquitous due to vigorous
marketing efforts by soft drink manufacturers, distributors, and
retailers coupled with consumer acceptance brought about by changes
in income, taste, the increase in leisure time, and favorable demo-
graphic factors. Soft drink manufacturers employ about 129,000
2
workers producing beverages valued at over $4 billion. In 1970
the average person consumed almost 8 ounces of soft drinks daily,
roughly 16 percent of his total daily consumption of liquids.
122
-------
Soft drink consumption is expected to increase 5.8 percent
annually through 1976, because of anticipated favorable trends in
income and population factors. This rate is below the 6.1 percent
annual rate for the period 1955-69.
B.3.2 Consumptions Trends
As Figure B-l shows, soft drink consumption and production (the
terms are used synonymously here) has increased steadily over the
last 14 years, increasing from 1.3 in 1955 to 2.9 billion cases in
1969. The average annual rate of growth in the period was 6.1
percent; however, it has varied on a year-to-year basis.
Assuming the continued historical relationship between per
capita income and per capita consumption and expenditures for soft
4200
4000
_ 3800
N
o
w 3600
at
•S 3400
M
S 3200
u
0 3000
to
c
I 2800
I
~ 2600
§
£ 2400
i
g 2200
g 2000
£
° 1800
&
« 1600
1400
1200
HISTORICAL I
1955 56 58 60 62
64 66 68 70
YEAR
72 74 76
Figure B-l. Soft drink consumption (Historical data from
National Soft Drink Association; projections
by Research Triangle Institute).
123
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Table B-2. PROJECTIONS OF SOFT DRINK CONSUMPTION
ro
Year
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
projected
1976
Total
population
(thousands)
165,931
168,903
171,984
174,882
177,830
180,684
183,756
186,656
189,417
192,120
194,592
196,920
199,118
201,166
203,216
220,315
Population
ages 10-29
(thousands)
47,226
47,597
48,968
56,075
51,255
52,426
53,858
55,426
57,193
59 ,079
60,999
63,009
65,068
67,075
68,933
78,999
Population
ages 10-29
(% of total)
28.5
28.2
28.5
28.6
28.8
29.0
29.3.
29.7
30.2
30.8
31.3
32.0
32.7
33.3
33.9
35.9
Personal
Income
per capita
(1967 $)
$2,310
2,378
2,390
2,263
2,437
2,468
2,498
2,586
2,651
2,749
2,888
3,058
3,161
3,309
3,419
$4,196
Soft drink
consumpti on
(thousands of
192-oz. cases)
1,264,925
1,321,214
1,360,850
1,359,489
1,484,560
1,476,544
1,524,236
1,667,514
1,800,915
1,948,590
2,104,282
2,352,587
2,470,452
2,777,035
2,913,110
4,218,114
Soft drink value
of production
(thousands of
1967 $)
$1,900,267
1,966,917
1,935,693
1,982,589
2,143,066
2,179,751
.2,269,334
2,452,227
2,719,151
2,805,279
2,996,240
3,371,529
3,458,632
3,885,776
3,877,253
$5,662,096
Soft drink
consumption
per capita
(oz.)
1,464
1,502
1,519
1,493
1,603
1,569
1,593
1,715
1,826
1,947
2,076
2,294
2,382
2,651
2,752
3,676
Sources:
Historical Data
Population—Bureau of Census, U.S. Department of Commerce.
Personal Income—Office of Business Economics, U.S. Department of Commerce.
Soft drink consumption and production—National Soft Drink Association.
Projections
Population—Bureau of Census, U.S. Department of Commerce.
Personal income—Office of Business Economics, U.S. Department of Commerce, interpolation between 1980
projection and 1970 value.
Soft drink consumption and value of production—Research Triangle Institute.
-------
drinks, we project 1976 consumption levels to be 36 percent above
that for 1970.* Per capita consumption is expected to increase
at 4.5 percent annually over the next five years, somewhat above the
anticipated growth in per capita income. By 1976 per capita consump-
tion is projected to reach 3,676 ounces annually (see Table B-2) or
ten ounces per day. With the expected increase in population, total
consumption should increase at an average rate of 5.8 percent.
The growth in soft drink consumption has primarily been due to
favorable economic and demographic trends and to an aggressive
marketing effort on the part of manufacturers, distributors, and
retailers. Figure B-2 shows the key economic and demographic
variables which contributed to the increase in soft drink consumption,
170.0
160.0
150.0
140X5
130.0
120.0
110.0-
100.0-
5 90.0
o
5 80.0
(L
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
HISTORICAL
PROJECTED
SOFT DRINK CONSUMPTION
TOTAL PERSONAL INCOME (1967 DOLLARS)
POPULATION (10-29 AGE GROUP)
POPULATION (TOTAL)
J I L
I I I I
J I I_J 1 I I
1955 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
YEAR
Figure B-2. Growth of soft drink consumption, population,
and income (Research Triangle Institute).
* It is not anticipated that per capita income will be a good
explainer toward the end of the seventies due to the projected diver-
gence in per capita income and the share of the population in the 10-29
age group after 1976. Prior to this time, the two indicators have
been moving together.
125
-------
Since 1955 personal income has increased at an average annual
rate of 4.3 percent (in constant dollars). On an average per capita
basis, personal income increased from $2,310 in 1955 to $3,419 in
1969 (1967 dollars) or at an average annual rate of 2.8 percent.
Not only have consumers had more income to spend on soft drinks,
but 22 million additional people have joined the 10-29 age group
since 1955 increasing its share of total population from 28.5 to
33.9 percent (see Figure B-2 for these trends).
On the marketing front, there has been the introduction of new
flavors and changes in the packaging and distribution system
emphasizing consumer convenience. These efforts have been brought
to the consumer's attention through intensive advertising.
Cola is the most popular flavor of soft drink, accounting for
about half of soft drink sales. Next to cola, the most popular
flavors on the basis of sales in 1970 were lemon-lime (14.4%),
orange (7.8%), root beer (6.3%), grape (3.8%), and ginger ale (2.7%).
Low-calorie soft drinks, first introduced in 1950, have shown
impressive growth although they have suffered somewhat recently due
to the ban on cyclamates. While there is undoubtedly some substitu-
tion of dietetic drinks for other soft drinks, it is generally
believed that these drinks have attracted additional consumers
interested in weight control, thereby giving impetus to the growth
in per capita beverage consumption.
Packaging of soft drinks has emphasized consumer convenience
and choice with such features as easy-open closures and one-way,
nonrefillable containers and with a proliferation of sizes of
containers ranging from 6.5 ounces to 24 ounces. Plastic bottles
are a future possibility because of their light weight.
Systems for distributing soft drinks have changed significantly
with at-home consumption today accounting for over two-thirds of
total consumption, about the same share that on-premise consumption
had at the beginning of this century. However, the reason that
on-premise consumption has been able to retain even one-third of
consumption is due to rapid growth in vending machines, for fountain
126
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Table B-3. DISTRIBUTION OF SOFT DRINKS 1970
(percentage shares)
Food chains, supermarkets 31
Independent food stores 24
Subtotal 55
Service stations 10
Beverage distributors 9
Bars, taverns 8
Cash and carry 6
Recreational outlets 5
Discount stores 4
Other 3
Source: "How Business?" 1970—14th
Annual Softdrinks sales survey, p.3.
and package shares have dropped significantly throughout this century.
Today, 20 percent of sales are from vending machines.
Most soft drink distribution is through food chains and independent
food stores as shown in Table B-3. Recently, however, cash and carry
stores and discount stores have all increased their shares.
As a result of these favorable economic and demographic develop-
ments plus changes in packaging and marketing, there has been an
increase in the per capita consumption of soft drinks. As Figure B-3
shows, had per capita soft drink consumption remained at the 1955
level, 1969 production would have increased by only 284 million
cases. The increase in per capita consumption, however, has provided
the most important source of growth, contributing an additional
1,364 million cases—4.8 times the population contribution.
Figure B-4 shows actual average per capita consumption for the
entire population and also for the 10-29 age group assuming they
consumed all soft drinks.
127
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TOTAL
CONSUMPTION
CONSUMPTION GROWTH
DUE TO INCREASES IN
PER CAPITA CONSUMPTION
SINCE 1955
CONSUMPTION
DUE TO
POPULATION
INCREASES
SINCE 1965
58 60 6Z 64 66 68 70 72 74 76
1955 56
Figure B-3.
Sources of soft drink consumption growth
(Research Triangle Institute).
B.3.3 Soft Drink Containerization
In 1969 there were over 47 billion soft drink fillings of which
about 60 percent were in refillable containers. Refillable bottles
have shown virtually no growth during the last 15 years causing their
share of soft drink containerization to decline from 99 percent in
1955 to their current level. By 1976, the nonrefillable bottles
are projected to have about 70 percent of the market share.
Consumer preference for convenience packaging, shifts in the
distribution of soft drinks toward off-premise and vending machine
128
-------
AVERAGE CONSUMPTION
ASSUMING POPULATION
AGED 10-29 CONSUMED
ALL SOFT DRINKS
AVERAGE CONSUMPTION
TOTAL POPULATION
57 59 61
63 65 67 69
YEAR
71 73 75 76
Figure B-4. Average soft drink consumption per capita
(Research Triangle Institute).
sales, and the push by the glass industry to nonrefiliable bottles
as a means of selling more glass have all contributed to the growing
share of nonrefi1 Tables.
Figure B-5 shows the trend in soft drink fillings between
refiliable bottles and nonrefiliable containers and the projected
shares.
129
-------
tn
ui
100
90
SO
70
o
» 60
ID
<
_l
5 50
cc.
u.
o
I 40
x
in
ui
| 30
i
20
10
NONREFILLABLE
BOTTLES
a CANS
REFILLABLE
BOTTLES
PROJECTED
HISTORICAL
10
20
30
o
z
40 UJ
m
UJ
50
60
70
80
90
5556 58 60 62 64 66 68 7O 72 74 76
YEAR
100
Figure B-5. Market shares: soft drink containerization
(Research Triangle Institute).
As shown in Figure B-6 and Table B-4, approximately 56 billion
soft drink fillings are projected for 1976. About 39 billion are
projected to be in nonrefillable bottles and cans, the remaining
17 billion in refillable bottles.
130
-------
50,000
40JOOO
„ 20,000
M
JE
c
3
g
tvj 10,000
- 9000
•S 8,000
: 7.000
g 6,000
| 5,000
- 4,000
(; 3,000
N
gj 2,000
z
o
z 800
E 700
a 600
h- 500
400
8
300
200
100
HISTORICAL
PROJECTED
• TOTAL
• CANS
• REFILL ABLE BOTTLES-
FILLINGS
NONREFILLABLE
BOTTLES
s
1
1
1
1
1
1
1
1
1
1
I
I
1
I
1955 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
YEAR
Figure B-6. Soft drink containerization trends (packaged). (Historical data, National
Soft Drink Association, projections by Research Triangle Institute).
-------
Table B-4. SOFT DRINK CONTAINERIZATION PROJECTIONS, 1976
Market shares
Refill able
bottles Nonrefillable
Total Packaged (fillings) bottles Cans
consumption consumption (percent) (percent) (percent)
4,218,114* 3,501,035t
30
23
47
Containerization projections
Refi liable
bottles
(fillings)
(thousands)
Nonrefillable
bottles
(thousands)
Cans
(thousands)
Total
fillings
(thousands)
16,804,968
12,883,809
26,327,783 56,016,560
Source: Research Triangle Institute.
*Thousands of cases, 192 ounces per case.
tAssumes 20 percent bulk sales.
B.4 Beer Consumption
B.4.1 General
Beer is one of man's oldest beverages dating back at least to
6000 B.C. Today, lager beer is the most popular type accounting for
about 95 percent of U.S. sales. The remainder of the U.S. market
is shared by ale, porter, and stout varieties of ale. One-half the
U.S. adult population are beer drinkers. The malt liquor industry
employs about 60,000 employees with 1969 sales of over $3.4 billion.
In 1970, the average person consumed 6.7 ounces of beer daily although
there are significant variations between urban and rural areas.
Beer consumption is expected to increase 3.4 percent annually
through 1976, significantly above the average rate of 2.6 percent
annually between 1955 and 1970.
132
-------
B.4.2 Consumption Trends
Beer consumption has increased in an erratic fashion during
the last 15 years with several years registering negative growth
in beer consumption—see Figure B-7. The rate of growth in beer
consumption, however, has trended upward.
Based on the anticipated growth in both personal income and
the adult population, especially the group aged 20-34, 1976 consumption
is expected to reach 145 million 31-gallon barrels, 16 percent above
the 1970 level. As shown in Table B-5, we project per capita beer
consumption to reach 2,620 ounces annually in 1976, an annual growth
rate of 2.2 percent.
195556 58 60 62
64 66 68 70 72
YEAR
74 76
Figure B-7. Beer consumption (Historical data, U.S. Brewers
Association; projections by Research Triangle Institute).
133
-------
Table B-5. PROJECTIONS OF BEER CONSUMPTION
CO
Year
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
\1966
1967
1968
1969
projected
1976
Total
population
(thousands)
165,931
168,903
171,984
174,882
177,830
180,684
183,756
186,656
189,417
192,120
194,592
196,920
199,118
201,166
203,216
220,315
Population
ages 20-34
(thousands)
34,997
34,738
34,447
34,294
34,138
34,027
34,066
34,327
34,959
35,471
36,048
36,669
38,264
39,696
41,165
52,150
Population
ages 20-34
(% of total)
21.1
20.6
20.0
19.6
19.2
18.8
18.5
18.4
18.5
18.5
18.5
18.6
19.2
19.7
20.3
23.7
Personal
Income
per capita
(1967 $)
$2,310
2,378
2,390
2,363
2,437
2,468
2,498
2,586
2,651
2,749
2,888
3,058
3,161
3,309
3,419
$4,196
Beer consumption
(thousands of 31-
gallon barrel s-
removals)
85,460
86,382
85,140
84,791
86,387
89,651
88,693
91,523
92,290
97,090
101 ,244
103,213
109,289
109,904
114,925
145,470
Beer value of
production
(thousands
of 1967 $)
$2,191,400
2,234,700
2,244,206
2,164,500
2,270,200
2,328,500
2,345,400
2,419,900
2,434,400
2,575,400
2,579,800
2,746,600
2,954,300
3,074,400
3,243,400
$4,324,800
Beer
consumption
per capita
(oz.)
2,044
2,029
1,964
1,924
1,928
1,969
1,915
1,946
1,933
2,005
2,065
2,080
2,178
2,168
2,244
2,620
Sources:
Historical Data
Population—Bureau of Census, U.S. Department of Commerce.
Personal Income—Office of Business Economics, U.S. Department of Conmerce.
Beer consumption and production—U.S. Treasury Department, U.S. Department of Conmerce.
Projections
Population—Bureau of Census, U.S. Department of Commerce.
Personal Income—Office of Business Economics, U.S. Department of Commerce, interpolation between 1980
projection and 1970 value.
Beer consumption and value of production—Research Triangle Institute.
-------
The primary source of the fluctuations in beer consumption in
the late 1950's and early 1960's was the decline in the 20-34 age
group, both absolutely between 1955 and 1960 and as a percent of the
total population from 1955 and 1962. The 20-34 age group is a
critical influence on consumption trends, as about 80 percent of
the males and 45 percent of the females in this age group are beer
consumers.6 As Figure B-8 shows, it wasn't until 1963 that the
population aged 20-34 reached its 1955 level. It wasn't until 1971
that it comprised the same percentage (21 percent) of total population
as it represented in 1955.
The growth in beer consumption as shown in Figure B-9 has not
been as dependent on increases in the average per capita consumption
as was soft drink consumption. For several years, per capita consump-
tion actually declined. With the continuation of current trends, we
are projecting only moderate consumption increases on a per capita
basis, see Figure B-10.
150.0
I40O
130.0
120.0
110.0
i 100.0
i 90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
BEER CONSUMPTION
TOTAL PERSONAL INCOME (1967 DOLLARS)
POPULATION (20-34 AGE GROUP)
, POPULATION (TOTAL)
I I L
J I 1 L
i pi * • — i — _~—__
1955 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
YEAR
Figure B-8. Growth of beer consumption, population, and income
(Research Triangle Institute).
135
-------
KEY
CONSUMPTION GROWTH
DUE TO INCREASES IN
PER CAPITA CONSUMP-
TION SINCE 1955
CONSUMPTION
GROWTH DUE
TO INCREASE
IN POPULATION
SINCE 1955
• DECREASE IN PER CAPITA
CONSUMPTION FROM 1995 LEVEL
1955 56 58 60 62
64 66 66
YEAR
70 72 74 76
Figure B-9. Sources of beer consumption growth
(Research Triangle Institute).
rcguuu
e tOjDOO
% SjOOO
•
^ 8,000
z 7.000
o
^ 6,000
§ 5000
o
£ 4.000
m
3.000
2 000
1.000
0
' *~\r • •
-.^S^^S HISTORICAL PROJECTED
P~^^^
AVERAGE CONSUMPTION ASSUMNG
POPULATION AGED 20-34 CONSUMED
ALL BEER
AVERAGE CONSUMPTION TOTAL
POPULATION
-
-
HISTORICAL! . •
i i i i i i i i i i
195556 58 60 62 64 66 68 70 72 74 76
YEAR
Figure B-10. Average beer consumption per capita
(Research Triangle Institute).
136
-------
Although beer consumption is influenced by the level of personal
income, the distribution of that income is critical; for while beer
consumption increases moderately with family income up to $10,000
annually, beyond $10,000 consumers tend to substitute distilled
spirits for beer. Ethnic backgrounds and climate are also important.
The consumption of beer also has a strong seasonal component with
summer consumption, roughly 50 percent greater than winter consumption.
Since most beer cannot be stored for more than one month because
of quality deterioration, industry productive capacity is geared to
meet the peak demand occurring in the summer months. As a result,
production averages about 85 percent of capacity on an annual basis.
The preference of brewers for carrying excess capacity in capital
rather than labor tends to increase the size of breweries. Brewery
size has also increased to achieve greater production economies of
scale and reach a larger market so that regional fluctuations in the
demand can be more easily smoothed out. As a result of these pressures,
since 1934 the number of breweries has dropped from 714 to 154. This
trend toward fewer breweries was encouraged and permitted by the
introduction of nonrefillable containers. These containers can be
economically shipped longer distances than refillables.
B.5 Beer Containerization
NonrefilTables, especially cans, dominate the beer packaging
market which reached over 34 billion fillings in 1969.
The trends toward nonrefillable containers began earlier for
beer containerization than for soft drinks containerization. For
example, in 1955, cans had 32 percent of the packaged beer market,
a figure not expected to be reached until 1972 in the soft drink
industry.
Our projection of the trend in beer containerization indicates
that by 1976 over 80 percent of the packaged beer will be in
nonrefillable containers (see Figure B-ll). The primary market
for refillables will continue to be taverns and restaurants.
As shown in Figure B-12 and Table B-6, 45 billion beer fillings
are projected for 1976. Over 36 billion nonrefiTTable cans and
bottles are projected.
137
-------
100
90
80
70
V)
o
ffl 60
ID
00
u
K
U.
O
t~
in
x
c
<
50
I ^o
m
30
20
10
NONREFILLABLE
BOTTLES AND CANS
PROJECTED
REFILLABLE
BOTTLES
HISTORICAL
I
I
I
I
I
I
I
I
I
I
10
20
g
30 2
40
50
60
70
CO
m
CD
<
Ul
K.
U.
O
CO
UJ
80 *
90
55 56 58 60 62 64 66 68 70 72 74 76
YEAR
100
Figure B-11. Market shares: beer containerization
(Research Triangle Institute).
138
-------
co
to
60.000
50,000
40.000
30,000
n
;J 20000
i 10,000
~ 9000
§ 8JOOO
5 7.°00
I 6.000
5 5,000
o 4,000
u
S 3,000
2,000
1,000
HISTORICAL
•——*x
PROJECTED
• TOTAL
CANS
NONREFILLABLE BOTTLES
RE FILL ABLE BOTTLES -
FILLINGS
I I I
I I I
1955 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
YEAR
Figure B-12. Beer containerization trends (packaged). (Historical data, U.S. Brewers Association;
projections by Research Triangle Institute).
-------
Table B-6. BEER CONTAINERIZATION, 1976
Market shares
Refill able
bottles Nonrefill able
Total Packaged (fillings) bottles Cans
consumption consumption (percent) (percent) (percent)
145,470* 125,470t 19 26 55
Containerization projections
Refi liable
bottles
(fillings)
(thousands)
Nonref i liable
bottles
(thousands)
Cans
(thousands)
Total
fillings
(thousands)
8,582,148 11,743,992 24,843,060 45,169,200
Source: Research Triangle Institute,
*Thousands of barrels removals, 31 gallons per barrel.
tAssumes 17 percent bulk sales.
B.6 References
1. Shih, K. C., and C. Y. Shin. American soft drink industry and
the carbonated beverage market—a statistical analysis and
graphic presentation. Studies of American industries, series
number 2. Brookfield, His., W. A. Krueger Co., 1965, p. 20.
2. U.S. Department of Commerce. U.S. Industrial Outlook 1970.
Washington, U.S. Government Printing Office, 1970, p. 46.
3. How's Business? 1970--14th annual Softdrinks sales survey.
Prepared by the editors of Softdrinks. New York, 1970, p. 3.
4. Shih, K. C. and C. Y. Shih. American soft drink industry and
the carbonated beverage market—a statistical analysis and graphic
presentation. Studies of American industries, series number 2.
Brookfield, Wis., W. A. Krueger Co., 1965, p. 44.
5. U.S. Department of Commerce. U.S. Industrial Outlook 1970.
Washington, U.S. Government Printing Office, 1970, p. 96.
6. American Can Company, A history of packaged beer and its
market in the United States, 1969, p. 20.
140
-------
Appendix C: TECHNOLOGY TRENDS IN BEVERAGE CONTAINERS AND RECYCLING
C.I Introduction
There is keen competition between the glass, aluminum, and steel
industries for the beverage container market. Such competition is
heavily dependent on the relative prices of the materials which, in
turn, are determined by the costs of extracting the raw materials,
converting them into purified or concentrated forms, and delivering
the plate, sheet, or shape to the manufacturer of the container.
Before World War II, glass dominated beverage containerization.
Since then, technological progress has introduced different materials
to the market for beverage containers. Substantial improvements in
steel and aluminum fabrication has led to the large-scale acceptance
of metal cans first by beer producers and distributors and later by
the soft drink industry.
This appendix outlines the major technological trends in beverage
containers and the processes and problems involved in recycling of
beverage containers.
C.2 Major Trends in Containerization
C.2.1 Glass Bottles
The most significant trend in glass beverage containerization
has been the displacement of refillable by nonrefillable containers
for both beer and soft drinks. This has been made possible in part
by weight reductions and strength increases that permit a cheaper
product that can still withstand the pressure of the liquid. There
is less glass per unit, lower raw material costs per unit, less
weight per unit, and, therefore, lower transportation costs. During
the last 20 years, the weight of most glass containers has been reduced
by about one-third. In 1970, nonrefillable bottles cost the bottler
about half the price of refillable bottles; see Table C-l. However,
they are more expensive on a per filling basis since each refillable
bottle is used several times. The most favorable comparison shows
nonrefillable bottles costing 13 times as much per filling as the
refillables on the basis of 16 trips per refillable bottle.
141
-------
Table C-l. COST OF GLASS BEVERAGE CONTAINERS TO THE BOTTLER, 1970
Container type
Refi liable bottle
Nonrefi liable
bottle
Source: U.S.
Unit cost
to bottler
.08
.035-. 045
Average
number
of trips
16-30
1
Department of Commerce. Industrial
Cost per
trip to
bottler
.0027-. 005
.035-. 045
Outlook, 1970
Washington, U.S. Government Printing Office, 1970.
The most radical new development in glass beverage containers is
a bulb-shaped, nonrefiliable glass bottle set permanently in a polyethy-
lene base, which can be partially separated from the glass after crush-
ing by flotation. This new bottle will weigh less than half the present
weight of nonrefillable bottles, will be stronger, and will be produced
3 times faster (600 bottles per minute) than conventional nonrefillable
bottles.2
Another development for nonrefillable bottles is a shrink-on plastic
band around the bottom half of the bottle. This band will permit the
bottles to be grouped in six-packs by a simple neck binding much the
way cans are. The plastic serves as a buffer that reduces the need
for additional packaging.
Several other important technological changes are expected in
the beverage container industry: (a) New closures are being developed.
(b) Shatterproof bottles will probably be available in the next 5 years.
(c) Decorations can now be put on bottles faster, (d) Filling rates
of 2,000 bottles per minute are anticipated, 3 times faster than present
rates, (e) It is now possible to color glass for smaller production
runs*, (f) A glass container is being studied that can be processed
to dissolve in water after use; the container would be a water soluble
superstructure (e.g., sodium silicate) with a thin impervious film
barrier.
142
-------
C.2.2 Metal Cans
Perhaps the most important development in the metal can industry
is the increased use of aluminum cans. Since their introduction in
1960, shipments had grown from 23,000 tons to 337,000 tons by 1969.4
Large quantities of aluminum are also used for easy-open ends on steel
beverage cans. Most aluminum cans are currently used for beer and soft
drinks. Aluminum's share of both markets is growing rapidly.
There have been advances in the "tin can" or, more accurately,
the steel can portion of the metal can industry. Double-reduced "thin"
tinplate permits more cans per pound of steel thereby reducing per unit
materials requirements. Aluminum cans are also thinner than when first
introduced. An innovation of significance for recycling is tin-free
steel (TFS). Tin was originally used for the interior coatings and to
aid in the solderability of the side seam. For some time now, organic
coatings could have replaced the tin coating had the tin not been neces-
sary for soldering. However, the recent development of organic cement
and resistance welding have eliminated the need for tin coating. Other
improvements in can manufacturing technology include improved printing
and lining techniques.
C.2.3 Plastic Containers
Plastic has several potential advantages as a beverage container.
It is lightweight, transparent, and shatter-resistant, and it may be
molded into many different shapes and colors. Offsetting these advan-
tages are the present high cost of the resin, gas permeability problems,
and poor compatibility of most plastics resin with certain beverages.
These last two factors limit the shelf life- of soft drinks to about
6-8 weeks in plastic containers compared to 6-8 months in glass and
metal containers.
Most of the plastic bottles being proposed for soft drinks are
either made of acrylonitrile resins (Barex 210 or Lopac). Bottles
of either material are about 17 percent lighter than those made of
polyvinyl chloride (PVC). The new plastics are much less gas per-
meable than PVC, they add no taste or odor to the contents, they
break less easily than glass, and only weigh 20 percent as much.
143
-------
The expected future cost per container with large-scale production
is $0.03 about the same as that for glass but less than that for
metal cans. Barex and Lopac bottles would only be used for soft
drinks since beer requires pasteurizing at 140° to 150°F. Both
can apparently be burned without emitting annoying or noxious gases.
The composition of incinerator effluents did not change when Barex
resin was added at levels from 0.5 to 8 percent of typical waste
materials.
Two soft drink companies are now test marketing a 10-ounce
plastic container. The liquor industry is already using PVC half-
gallon containers because of weight advantages. (A glass half-
gallon liquor bottle averages 2-1/2 pounds; a plastic one weighs
3-1/2 ounces.) Plastic half-gallon containers are still only a
small portion of all half-gallon units, but by 1980 some observers
expect that virtually all containers of this size may be plastic.
C.3 Technology of Recycling
Recycling differs from reuse in that the latter simply requires
cleaning the container after the beverage has been consumed. Beer
and soft drink bottles have traditionally been reused or refilled.
Recycling means the container is broken and melted before it is
made into a new container. For example, glass bottles are broken,
melted, and molded before they are used again, and metal cans are
shredded, melted, rolled, and formed before reuse.
C.3.1 Glass Bottles
Glass is made of sand (72%), soda ash (12%), and limestone (13%),
plus feldspar and small quantities of other materials. The raw
material costs of glass are low because the major ingredients are
abundant in the earth's crust. There is still, however, an incen-
tive to recycle glass because the addition of waste glass, called
cullet, reduces the melting temperature in the furnace, lowers the
fuel requirements, extends the life of furnace linings, and produces
o
a "melt" faster than is possible with only virgin materials. Cullet
144
-------
is so useful that if none is available from rejects or trim waste,
the factory will intentionally produce it.
Gullet must be sorted by color and be free of metal and other
impurities. Because of variances in the chemical composition of
purchased cullet, manufacturers prefer cullet generated internally.
The percentage of cullet used in all glass products varies from 8
to 100 percent of the weight of the inputs. The glass container
industry has a goal of 30 percent purchased cullet8 but there are
apparently no physical limitations to using cullet exclusively.
A market probably exists for all the cullet that can be produced,
if it is of sufficiently high quality and sufficiently low price.
Most members of the Glass Containers Manufacturers Institute
will pay $20 per ton for clean, cap-free, color-sorted cullet
Q
delivered to the plant. However, glass cannot usually be col-
lected, separated, crushed, cleaned, and delivered profitably
for this price. There is little likelihood of the price rising
in the future because raw materials only cost $16 to $20 per ton
for a batch of glass containers and cullet gives the plant only
$2 to $3 of input.
Purchased cullet comes from dealers who collect it from bot-
tling plants, dairies, breweries, etc. They formerly also col-
lected it from city dumps, but high labor costs now make this
practice prohibitive. The average mix of glass containers in
solid waste is 3,610 bottles per ton of solid waste. Picking
this many bottles by hand, separating them .by color, cleaning and
crushing them, removing metal rings and other impurities, and
transporting them cannot be done commercial ily for $20 per ton.
A study in Chicago in 1967 concluded that "cullet could not be
profitably processed there even at the cost of $30 per ton".
Gullet is being collected at 94 plants in 25 States. Most
of the cullet going to these plants is collected by community
groaps, students, Scouts* and others who do not pay the contributors.
Although the labels -do :not have to be removed, all metal does,
145
-------
including the aluminum neckrings. There is little information on
the amount of purchased cullet, but best estimates are 580,000 tons
for the total industry, and only 100,000 tons or 1.1 percent of
production for the glass container segment (Table C-2), most of
which comes from bottling operations. The current recycling effort
by citizens' groups (August 1971) is collecting 60,000 tons of
bottles and jars per year. However, the effort is not economically
viable. It depends on volunteer participation at the collection
centers, highly motivated citizens, and industry subsidization to
keep costs down. One industry spokesman has estimated the actual
12
cost at $50 per ton. Citizen participation probably will not
grow considerably under current situations; a study of glass col-
lection in Ann Arbor, Michigan, showed that the participants had
a much higher educational and income level than the national average
or even the average for Ann Arbor.
Landfill or incinerator operations are other sources of cullet
which probably have the greatest potential for large-scale salvage because
Table C-2. GLASS PRODUCTION AND EXTERNAL CULLET CONSUMPTION, 1967
Segment of
glass industry
Containers
Flat glass
Pressed and blown
Total
Production
(thousand
tons)
8,950
2,150
1,720
12,820
External
cullet
consumption
(thousand
tons)
100
244
256
600
External
cullet
(percent)
1.1
11.3
14.9
4.7
Source: U.S. Department of Commerce, Bureau of the Census,
1967 Census of Manufactures, Preliminary Reports, "Glass Containers,
SIC 3221; "Flat Glass," SIC 3211; "Pressed and Blown Glass, n.e.c.,1
[not elsewhere classified] SIC 3229; Washington, October 1969; pro-
duction estimate for flat glass and pressed and blown glass by MRI;
external cullet consumption in containers, MRI estimate from data
developed by Midwest Research Institute. Economic Study of Salvage
Markets for Commodities Entering the Solid Waste Stream, December
1970, pp. 7-13.
146
-------
they do not require special actions from the citizens. It is a sepa-
ration rather than a collection problem. There are systems that can
separate and sort glass mechanically. The Bureau of Mines has a sys-
tem to extract glass from incinerator residue and to separate colored
from clear glass.13
The Black Clawson Company has a pilot plant to treat and salvage
materials that is largely based on the technology of the pulp and
paper industry: glass is screened out, collected but currently is not
separated by color; thus it only sells at $12 per ton. Optical
sorting by color is possible with existing machinery (Sortex Company)
but it has not yet been applied to solid v/aste processing, although
there are plans to attach a Sortex machine to the Black Clawson plant.
Because of the problems of sorting glass by color and chemical
composition, uses have been sought for mixed waste glass. The Bureau
of Mines Ceramic Laboratory has developed the technology to convert
glass incinerator residue into building blocks. The Solid Waste
Management Office of EPA has sponsored research at the University of
Missouri at Rolla to use crushed waste glass as aggregate in "glass-
phalt" in which glass substitutes for crushed limestone. This use for
waste glass would require more than the amount available and would not
require much transportation because most municipalities have their own
hot batch asphalt plants. The process may not be economical, however,
since limestone is inexpensive. Waste glass can also be used for glass
wool insulation, chicken grit, specialty paints and decorations, abra-
sives, match heads and strikers, ammunition, and for the cleaning and
tumbling of castings.
C.3.2 Metal Cans
Recycling of metal cans differs for aluminum and steel cans.
Aluminum cans are easy to recycle but difficult to separate from other
refuse; steel cans are easy to separate magnetically but more difficult
to recycle. Recent attention has centered on aluminum cans because of
their salvage value. The economics of aluminum cans may be sufficiently
favorable that they will be salvaged without any government incentives,
but steel cans probably will require incentives before they are recycled
on a large-scale.
147
-------
Aluminum was an estimated 0.5 percent of municipal waste in 1968
or 968,500 tons; this amount was about 24 percent of total aluminum
consumption. At the average price of $200 per ton for scrap aluminum,
the potential value of aluminum in refuse was about $193.7 million.
There is an active market in scrap aluminum with dealer's prices ranging
from $155 per ton to $290 per ton depending on the form. Scrap aluminum
18
prices at the smelter are $280 to $355 per ton. During the 1960-68
period, the average selling price of secondary aluminum (made from scrap)
was $470 per ton, or $63 below primary alloy. Not only is secondary
aluminum interchangeable with primary alloy for most purposes, but it
requires a much smaller investment and lower operating costs to produce.
Reynolds Aluminum, which collected aluminum oil cans in the 1950's
and aluminum roofing and siding in the 1960's, set up an experimental
program to collect aluminum cans in 1967 in Miami, Florida. It did not
"1 O
succeed because of high collection costs. A second experiment under-
taken in Los Angeles in 1969 using a single reclamation center revealed
that 30 tons per month had to be collected to break even, according to
Reynolds. There are now collection points operated by beer and soft
drink distributors and the three major primary aluminum producers in
10 Western States. It was expected that up to 4 percent of total
aluminum cans consumed in Los Angeles would be recovered in 1971. Simi-
lar programs operated by aluminum producers and bottlers may recover up
18
to 30 percent of all aluminum cans.
While collection may recover 30 percent of aluminum beverage con-
tainers and thus solve one-third of this part of the beverage container
problem, it may also reduce the likelihood of success of a broader
recovery program. The scrap value of aluminum in municipal solid waste
stream is 10 times higher per pound than any other material. If present
trends continue, aluminum will be the single most valuable component.
Aluminum could be recovered from incinerator residue by selective distil-
lation—each metal melts at a different temperature and thus can be cap-
tured. Other techniques under consideration are optical, mechanical,
and chemical means that will separate nonferrous metals from municipal
refuse before incineration.
Steel cans offer less recycling opportunities than aluminum cans
because of their low value as scrap even though they are easily separated
148
-------
magnetically from municipal refuse. Until recently, most steel cans
20
were contaminated by about 0.5 percent of tin. Because tin forms
hard spots in steel, tin cans have traditionally been unacceptable
in scrap. The only use for old tin cans, other than in sash weights
and other ballasts, is as precipitation iron in a leaching process
for the beneficiation of copper ore. This use is limited because
of the small market, high transportation costs, and the need to
incinerate and shred the cans. Only about 600,000 tons of old steel
cans were thus consumed in 1968, and the upper limit would be 1,500,000
tons if all precipitation iron were supplied by tin cans. Since the
total production of all metal cans (aluminum cans get mixed into those
used by the copper producers) was 6 million tons in 1967, this use will
not solve the solid waste problem.
Detinning of tin cans is not a major source of tin and/or steel
scrap because of market forces rather than technical problems even
though the aluminum ends of steel cans cause problems. The profit
margin is too slim to permit the cleaning of used tin cans prior to
detinning. The economics might change, however, if the detinning
plants could obtain used tin cans at sufficiently low costs.
The current trend of lower tin content to tin-free steel cans
22
should encourage recycling of steel cans. On June 23, 1971, the
major producers of steel for cans announced a program to recycle
steel cans: a total of 244 collection stations will accept cans
but will not pay for them because steel is so inexpensive; they
propose to make donations to the communities where the cans are
collected. This program began when research showed that the con-
taminants in the cans are diluted by the large quantities of scrap
and ore used in the furnaces. The possibility of legislation ban-
ning nonrefiliable containers also was a significant influence.
C.4 References
1. U.S. Department of Commerce. U.S. Industrial Outlook 1970.
Washington, U.S. Government Printing Office, 1970. p. 47.
2. U.S. Department of Commerce. U.S. Industrial Outlook 1970.
'Washington, U.S. Government Printing Office, 1970. p. 96.
149
-------
3. Hulbert, S. F., C. C. Fain, M. M. Cooper, D. T. Ballenger, and C. W.
Jennings. Improving package disposability.. U.S. Environmental
Protection Agency. Proceedings: First National Conference on
Packaging Wastes, San Francisco, Sept. 22-24, 1969. Washington,
U.S. Government Printing Office, 1971. p. 147.
4. Can Manufacturers Institute, Inc. Annual Report: Metal Cans
Shipments, 1969. Washington, 1970. p. 8.
5. Gotsch, L. P. Waste from metal packages. U.S. Environmental
Protection Agency. Proceedings: First National Conference on
Packaging Wastes, San Francisco, Sept. 22-24, 1969. Washington,
U.S. Government Printing Office, 1971. p. 72.
6. Waechter, C. J. How will plastic soft drink bottles affect your
packaging? Package Development, July/Aug. 1971. p. 29-31.
7. Innovations in plastic containers. Modern Brewery Age, 22(5):26ff.,
Feb. 1, 1971. p. MS-27.
8. Darnay, A., and W. E. Franklin. Economic study of salvage markets
for commodities entering the solid waste stream. Prepared by
Midwest Research Institute for the Bureau of Solid Waste
Management. Cincinnati, Ohio, 1970. p. 7-13,7-18.
9. Owens-Illinois, Inc. Guidelines for glass recycling in your
community. Toledo, Ohio. p. 2.
10. Darnay, Arsen, and William E. Franklin. The role of packaging in
solid waste management, 1966 to 1976. U.S. Department of HEW,
Bureau of Solid Waste Management, Publication SW-5c. [Rockville,
Maryland: B. of SWM, 1969J. p. 131.
11. Glass Container Manufacturers Institute, Inc. Questions and answers
about the reclamation and recycling of glass containers. New
York. p. 2.
12. Glass Container Manufacturers Institute, Inc. Questions and answers
about the reclamation and recycling of glass containers. New
York. p. 7-23.
13. Technology Review, July/Aug. 1971. p. 58.
14. Compost Science, July/Aug. 1970, reprint, p. 36.
15. Drobny, N. L., H. E. Hull, and R. F. Testin. Recovery and
utilization of municipal solid waste. Prepared by Battelle
Memorial Institute Columbus Laboratories for the Solid Waste
Management Office. Washington, U.S. Government Printing Office,
•1971. p. 47-49.
16. National Industrial Pollution Control Council. Glass containers.
Washington, U.S. Government Printing Office, 1971. p. 15-17.
17. Glass Container Manufacturers Institute, Inc. The solid waste facts
book. New York. p. 18.
150
-------
18. Darnay, A., and W. E. Franklin. The role of packaging in solid
waste management 1966 to 1976. U.S. Dept. of HEW, Bureau of Solid
Waste Management, Publication SW-5c. [Rockville, Maryland: B of
SWM, 1969]. p. 6-9, 6-11, 6-14.
19. National Association of Secondary Material Industries, Inc.
Effective technology for recycling metal. New York, 1971. 127 p.
20. Darnay, A., and W. E. Franklin. The role of packaging in solid
waste management 1966 to 1976. U.S. Dept. of HEW, Bureau of Solid
Waste Management, Publication SW-5c. [Rockville, Maryland: B of
SWM, 1969]. p. 127.
21. Darnay, A., and W. E. Franklin. Economic study of salvage markets
for commodities entering the solid waste stream. Prepared by
Midwest Research Institute for the Bureau of Solid Waste
Management. Cincinnati, Ohio, 1970. p. 5-55.
22. Darnay, A., and W. E. Franklin. Economic study of salvage markets
for commodities entering the solid waste stream. Prepared by
Midwest Research Institute for the Bureau of Solid Waste
Management. Cincinnati, Ohio, 1970. p. 5-30, 5-37.
23. Fiserer, L. A., ed. Solid Waste Report, 2(13):114, June 28, 1971,
Silver Spring, Md.
151
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Appendix D: RESOURCE REQUIREMENTS OF MAJOR CONSUMER EXPENDITURES
D.I Introduction
The input-output table of the U.S. economy developed by the
U.S. Department of Commerce can provide Insight regarding the
resource requirements of major consumer expenditure items.
Input-output is a method for taking into account the inter-
dependence among the industries or sectors of an economy. The
method of presenting this interdependence is by arraying the
industries in an economy in matrix form with each industry
entered in both the row and column of the matrix. When in a
row, the industry is a producer with the entries in the matrix
across the row showing the industry's distribution of sales.
When in a column, the industry is a purchaser with the entries
in the matrix down the column showing the industry's distribution
of purchases.
In addition to the interindustry sales and purchases, the
input-output table also has a set of final demand columns (pur-
chases by consumers, business investment, government, and
foreigners) and a value-added row (employee compensation, profits,
depreciation, and indirect business taxes).
D.2 Review of Input-Output Analysis
The total output of any industry can be represented by the
following equation:
n
T x.. + c. + i. + g. + t. = x. (i = 1 ..., n) , (D-l)
^ ij i i i i i
where:
x.. amount of output that industry i sells to industry j_,
I J
c. personal consumption expenditures for the output of
industry i,
153
-------
i. = private investment,
g. = government purchases",
t. - net exports,
x. total output of industry i_.
Although input-output tables are initially developed with
transactions estimates of interindustry sales and final demand
purchases, the table's usefulnesses greatly increased when the
transactions are converted into a system of technical coefficients
of production. The technical or input coefficient is the ratio of
input to output and can be written as follows:
a,, =!il, (D-2)
where:
a.. = technical coefficient,
* V
x.. - amount of output of industry i purchased by industry j
ij — -
x. total input of industry^.
•J
The complete set of technical coefficients arranged in matrix
form show the structure of production of the economy.
By substituting the value of x.. from equation D-2 into
equation D-l yields
V •
In matrix notation this can be expressed as:
x = Ax + f ,
where:
f = the final demand vector c + i + g + t
154
-------
This is equivalent to:
x - Ax f
(I-A)x f
where:
I the identity matrix.
Solving for x, total output:
x (I-ArV . (D-4)
Or. rewriting equation D-4:
xl rllfl +r!2f2+
xn=rnlfl +rn2f2+ - rnnfn
The r.. is the total requirements, direct and indirect, of industry
i_ necessary for industry j_ to deliver a dollar's worth of output to
final demand. It differs from a., in that it includes the indirect
requirements as well as the direct requirements shown in a... The
' J
difference in perspective can be illustrated by taking an example
frpm the 1963 national table. The technical coefficient (a..) of the
motor vehicle industry for steel is 0.0863. That is, each dollar
of output of motor vehicles requires 8.6 cents of direct steel pur-
chases. However, to build a motor vehicle requires other inputs
which, in turn, require steel as an input. The technical coefficient
for the rubber and miscellaneous plastics products used by the motor
vehicle .industry is, for example, 0.0223, but to produce rubber requires
a direct input of steel of 0.0051. The total requirements of the motor
vehicle industry for steel (r..) which include all the indirect steel
* \J
requirements of the type cited above as well as the direct requirements
is 0.2121.
155
-------
D.3 Resource Requirements
By combining the total requirements table with another table
developed by the U.S. Department of Commerce which shows the
industrial composition of the major consumer expenditure items, one
can identify the total inputs required for each consumption item. While
focusing on natural resources and secondary energy (electricity),
we calculated the amount of seven resources in the input-output table
per dollar of consumer purchases for 83 major expenditure items.
These resource requirements are tabulated in Table D-l. As the
table shows, there are substantial differences in the natural
resource requirements of consumer expenditures.
156
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Table D-l. NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
en
Each entry represents the output required, ^
directly and indirectly, from the industry g>£
named at the head of the column for each dol- "2^.^
lar of consumer purchases within the group of a § E
products named at the beginning of the row. o t £
i- 0) t-
1—1 4- O
Personal consumption expenditure categories
I
1
2
3
4
5
II
1
2
3A
FOOD AND TOBACCO
Food purchased for off-premise
consumption (NDC)
Purchased meals and beverages (NDC)
Food furnished gov't (inc. military)
and commercial employees (NDC)
Food produced and consumed on
farms (NDC)
Tobacco products (NDC)
CLOTHING, ACCESSORIES, AND JEWELRY
Shoes and other footwear (NDC)
Shoe cleaning and repair (S)
Women's and children's clothing
Col. A
0.
0.
0.
0.
0.
0.
0.
00097
00072
00117
00102
00041
00066
00058
Nonferrous
metal ores
mining
Col.B
0.
0.
0.
0.
0.
0.
0.
00059
00049
00066
00076
00046
00071
00082
o>
c
c
•r—
Col.C
0.
0.
0.
0.
0.
0.
0.
00230
00196
00257
00211
00136
00218
00157
TD (/)
.— -o
O C O)
,
S£fc
O C -i— 3
I/) E CT
Col.E
0.00163
0.00124
0.00188
0.00306
0.00102
0.00091
0.00124
T3
03 $-
O>
i— N
ra -i- i—
O i— fO C7>
•r- •,- S- C
E +J QJ -i-
Q) S- C C
^:
O +J •!- 10
•i- ITJ C 0)
S- 3 03 O
4J (/> -r-
O ' >
<1) VI -O S-
i — (O C t3 w
C61.G
0.02588
0.02707
0.02523
0.02341
0.01644
0.02358
0,02712
and accessories except
footwear (NDC)
0.00052 0.00065 0.00215 0.00929 0.00083 0.00130 0.02507
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories
en
oo
3B Men's and boys' clothing
except footwear (NDC)
4 Standard clothing issued to
military personnel (NDC)
5 Cleaning, dyeing, pressing,
alteration, storage, and
repair of garments (S)
6 Laundering in
establishments (S)
III
7
8
[
1
2
Jewelry and watches (DC)
Other clothing and
accessories (S)
PERSONAL CARE
Toilet articles and
preparations (NDC)
Barbershops, beauty parlors,
and baths (S)
IV HOUSING
1 Owner occupied nonfarm
dwellings—space rental
value (S)
0.00052 0.00061 0.00206 0.00912 0.00078 0.00122 0.02466
0.00096 0.00110 0.00380 0.01279 0.00136 0.00312 0.03109
0.00058 0.00082 0.00157 0.00975 0.00124 0.00056 0.02712
0.00058 0.00082 0.00157 0.00975 0.00124 0.00056 0.02712
0.00179 0.00301 0.00239 0.00919 0.00122 0.00085 0.02559
0.00058 0.00082 0.00157 0.00975 0.00124 0.00056 0.02712
0.00212 0.00209 0.00287 0.01207 0.00160 0.00267 0.02735
0.00058 0.00082 0.00157 0.00975 0.00124 0.00056 0.02712
0.00050 0.00050 0.00095 0.00804 0.00196 0.00041 0.00964
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories
Ul
2 Tenant occupied nonfarm
dwellings (inc. lodging
houses) (S)
3 Rental value of farmhouses (S)
4 Other housing (S)
HOUSEHOLD OPERATION
1 Furniture, including mattresses
and bedsprlngs (DC)
2 Kitchen and other household
appliances (DC)
3 China, glassware, tableware,
and utensils (DC)
4 Other durable house furnishings (DC)
5 Semidurable house furnishings (NDC)
6 Cleaning and polishing preparations,
misc. household supplies (NDC)
7 Stationery and writing supplies (NDC)
8A Electricity (S)
0.00050 0.00050 0.00096 0.00806 0.00195 0.00041 0.00988
0.00050 0.00050 0.00095 0.00804 0.00196 0.00041 0.00964
0.00058 0.00082 0.00157 0.00975 0.00124 0.00056 0.02712
0.00192 0.00160 0.00258 0.00962 0.00106 0.00086 0.02610
0.00507 0.00557 0.00421 0.00963 0.00194 0.00090 0.02595
0.00348 0.00342 0.00390 0.01036 0.00632 0.00129 0.03244
0.00220 0.00369 0.00302 0.01067 0.00226 0.00135 0.02803
0.00086 0.00102 0.00266 0.01101 0.00113 O.C0164 0.02937
0.00184 0.00211 0.00445 0.01470 0.00649 0.00417 0.03245
0.00102 0.00132 0.00402 0.01211 0.00222 0.00281 0.03117
0.00063 0.00053 0.03483 0.09432 0.00150 0.00040 1.25649
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories A B C D E F G
8B
8c Water and other sanitary
services (S)
80 Other fuel and ice (NDC)
9 Telephone and telegraph (S)
10 Domestic service (S)
11 Other household operation
expenditure (S)
VI MEDICAL CARE EXPENSES
1 Drug preparations and
sundries (NDC)
2 Ophthalmic products and
orthopedic appliances (DC)
3 Physicians (S)
4 Dentists (S)
5 Other professional medical
services (S)
0.00063 0.00053 0.03483 0.09432 0.00150 0.00040 1.25649
0.00067 0.00057 0.03175 0.08235 0.00183 0.00049 1.06368
0.00093 0.00081 0.05047 0.26283 0.00327 0.00115 0.04419
0.00018 0.00027 0.00073 0.00574 0.00065 0.00011 0.01678
0.00047 0.00050 0.00610 0.01102 0.00087 0.00035 0.02348
0.00116 0.00115 0.00258 0.01200 0.00153 0.00244 0.02771
0.00090 0.00186 0.00204 0.00932 0.00095 0.00090 0.02626
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00029 0.00032 0,00203 0.00782 0.00079 0.00034 0.04182
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034. 0.04182
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories A B C D E F G
6 Privately controlled hospitals
and sanitariums (S)
7 Health insurance (S)
VII PERSONAL BUSINESS
1 Brokerage charges and investment
counseling (S)
2 Bank service charges, trust
service , and safety
deposit box rental (S)
3 Services rendered without
payment by financial
intermediaries except
insurance companies (S)
4 Expenses of handling life
insurance (S)
5 Legal services (S)
6 Funeral and burial expenses (S)
7 Other personal business (S)
VIII TRANSPORTATION
1A New cars and net purchases
of used cars (DC)
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00019 0.00021 0.00172 0.00619 0.00052 0.00023 0.03425
0.00019 0.00021 0.00172 0.00619 0.00052 0.00023 0.03425
0.00019 0.00021 0.00172 0.00619 0.00052 0.00023 0.03425
0.00019 0.00021 0.00172 0.00619 0.00052 0.00023 0.03425
0.00019 0.00021 0.00170 0.00612 0.00051 0.00023 0.03388
0.00047 0.00057 0.00191 0.00711 0.00077 0.00067 0.02728
0.00067 0.00073 0.00193 0.00975 0.00471 0.00066 0.02527
0.00033 0.00038 0.00698 0.00753 0.00077 0.00041 0.03650
0.00777 0.00391 0.00542 0.00903 0.00172 0.00074 0.02769
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories A B C D E F 6
IB Tires, tubes, accessories,
and parts (DC)
1C Automobile repair, greasing,
washing, parking, storage,
and rental (S)
ID Gasoline and oil (NDC)
IE Bridge, tunnel, ferry, and
road tolls (S)
IF Automobile insurance premiums
less claims paid (S)
2A Street and electric railway
and local bus transportation (S)
2B Taxicab transportation (S)
2C Railway (commutation)
transportation (S)
3A Railway (excluding (commutation)
and sleeping and parlor car (S)
3B Intercity bus transportation (S)
3C Airline transportation (S)
0.00193 0.00304 0.00350 0.01256 0.00197 0.00321 0.03141
0.00153 0.00123 0.00198 0.01045 0.00179 0.00048 0.02127
0.00061 0.00066 0.00195 0.23485 0.00291 0.00082 0.03336
0.00086 0.00078 0.01758 0.02397 0.00357 0.00097 0.12956
0.00019 0.00021 0.00172 0.00619 0.00052 0.00023 0.03425
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories
co
3D Other intercity transportation (S)
IX RECREATION
1 Books and maps (DC)
2 Magazines, newspapers, and sheet
music (NDC)
3 Nondurable toys and sport
supplies (NDC)
4 Wheel goods, durable toys, sport
equipment, boats, pleasure
aircraft (DC)
5 Radio and television receivers,
records, and musical instruments (DC)
6 Radio and television repair (S)
7 Flowers, seeds and potted plants (NDC)
8A Motion picture theaters (S)
8B Legitimate theaters and opera,
and entertainments of nonprofit
institutions (excluding
athletics) (S)
8C Spectator sports (S)
0.00088 0.00058 0.00187 0.02605 0.00118 0.00032 0.01936
0.00053 0.00063 0.00253 0.00879 0.00133 0.00129 0.02353
0.00057 0.00068 0.00269 0.00926 0.00142 0.00138 0.02445
0.00176 0.00309 0.00249 0.00955 0.00127 0.00105 0.02507
0.00373 0.00357 0.00345 0.00921 0.00133 0.00092 0.02636
0.00163 0.00352 0.00206 0.00790 0.00103 0.00060 0.02292
0.00058 0.00082 0.00157 0.00975 0.00124 0.00056 0.02712
0.00058 0.00059 0.00149 0.01676 0.00225 0.00165 0.02503
0.00033 0.00042 0.00117 0.00624 0.00071 0.00059 0.02400
0.00033 0.00042 0.00117 0.00624 0.00071 0.00059 0.02400
0.00033 0.00042 0.00119 0.00625 0.00072 0.00060 0.02400
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Personal consumption expenditure categories A B C D E F G
9 Clubs and fraternal organizations
except insurance (S)
10 Commercial participant
amusements (S)
11 Parimutual net receipts (S)
12 Other recreational expenditure (S)
X PRIVATE EDUCATION AND RESEARCH
1 Private higher education (S)
2 Private elementary and secondary
schools (S)
3 Other private education and
research (S)
XI RELIGIOUS AND WELFARE ACTIVITIES
1 Religious and welfare (S)
XII FOREIGN TRAVEL AND OTHER, NET
1 Foreign travel by U.S. residents (S)
2 Expenditures abroad by U.S.
government personnel (military
and civilian) (NDC)
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00037 0.00043 0.00122 0.00756 0.00074 0.00057 0.02369
0.00033 0.00042 0.00117 0.00624 0.00071 O.OC059 0.02400
0.00043 0.00047 0.00152 0.00813 0.00095 0.00054 0.02728
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00029 0.00032 0.00203 0.00782 0.00079 0.00034 0.04182
0.00014 0.00009 0.00029 0.00400 0.00018 0.00005 0.00297
0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000
(See next page for footnotes.)
-------
Table D-l (continued). NATURAL RESOURCE REQUIREMENTS FOR MAJOR PERSONAL CONSUMPTION EXPENDITURES
Code (following group titles):
DC - consumer durable commodities
NDC - nondurable commodities
S - services
Source: Survey of Current Business, Vol. 49, No. 11 (November 1969), and Vol. 51, No. 1 (January 1971).
CTi
01
-------
From the t-values shown, it is seen that the price elasticity
estimate is not very reliable, with the lack of precision due to the
high degree of multicollinearity among the independent variables.
In an attempt to overcome this difficulty, two approaches using the
technique of conditional regression analysis were employed: (a) speci-
fication of a fixed ratio between income and price elasticity, and
(b) specification of fixed value for the income elasticity.
The best results were obtained with a ratio of income to price
elasticity of -8.0. The estimated price elasticity is -0.15, with a
standard error of 0.036. The estimated income elasticity is 1.20,
with a standard error of 0.288.
E.3 Beer Consumption
An identical approach was followed for beer consumption. The
definitions of the variables are similar, with per capita consumption
measured in ounces and the appropriate age group taken as 20-34.
Results are as follows:
LCON = 3.0044 + 0.3341 LPI - 0.1733 LRP + 0.6685 LPOP
(3.13) (-0.53) (6.35)
s2 v = 0.00034 R2 0.937
y .x
LCON 2.6071 + 0.3875 LPI + 0.6579 LPOP
(11.82) (6.55)
s2 0.00033 R2 = 0.936
y .x
Houthakker and Taylor, in their study Consumer Demand in the United
States. reported a short run income elasticity for alcoholic beverages
of 0.2898.1 Therefore, a conditional regression with income elasticity
fixed at 0.30 was attempted, with the following results:
price elasticity: -0.27
standard error: 0.10
t-value: -2.72
Therefore, a choice exists between the first calculated price
elasticity for beer of -0.17, which is statistically insignificant,
and the price elasticity for all alcoholic beverages of -0.27, which
169
-------
is statistically significant. Both figures show that the price
elasticity of demand for beer is inelastic, although the latter
figure shows a greater responsiveness to price changes than does
the former. In more concrete terms, this means that if price
rises by 1 percent, the quantity demanded by consumers will decline
by 0.17 percent if -0.17 is used and by 0.27 percent if -0.27 is
used as the own-price elasticity.
E.4 Conclusion
Both soft drinks and beer consumption were found to be rather
price inelastic when there were small changes in price. For com-
putational purposes, the price elasticities for both commodities
were rounded to -0.2.
E.5 Reference
1. Houthakker, H. S., and L. D. Taylor. Consumer Demand in the
United States: Analyses and Projections. 2d ed. Cambridge,
Massachusetts, Harvard University Press, 1970. p. 61.
-------
Appendix E: ELASTICITY OF DEMAND
E-l Introduction
The elasticity of demand is a measure of the responsiveness
of demand to a change in one of its determinants: own price, the
price of other commodities, or the income of buyers. It is often
expressed as the percentage change in the quantity demanded in
response to a 1 percent change in the price or other determinant.
Demand is considered to be elastic if the elasticity coefficient
is less than -1 (e.g., -1.2). This implies that total revenue
(quantity times price) will decrease when price rises. If total
revenue increases with a price increase, the elasticity coefficient
is greater than -1 (e.g. -0.8) and demand is inelastic. If the
elasticity coefficient is equal to -1, then there is no change
in total revenue as prices change and the elasticity is unitary.
The income elasticity of demand is the ratio of the relative
change in the quantity demanded of a commodity to the relative
change in income. The cross-elasticity of demand is the ratio
of the relative change in the quantity demanded of one product
to the relative change in price of another related product.
One attempt was made in this project to calculate the cross-
elasticity of demand for beer as a function of distilled spirit
prices, but the result was rejected as illogical, probably due
to the strong correlation of the data series for beer and distilled
spirits prices. This aspect of demand elasticity was not pursued
further.
The price elasticity is defined as holding for a particular
point on the demand curve and thus is most accurate for very small
changes in price and quantity. The effects of large changes in
prices cannot be determined without more knowledge of the demand
curve.
167
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E.2 Soft Drink Consumption
The data used were for the period 1955-1970 and were U.S. aggregates.
The data were converted to natural logarithms before calculation, a trans-
formation consistent with numerous empirical demand studies and one which
permits the analyst to obtain the elasticity coefficient directly from an
associated regression equation. The definition of variables is as follows:
Variable Definition
ICON Logarithm of per capita soft drink
consumption, in ounces.
LPI Logarithm of per capita personal in-
come in 1968 dollars. Current
dollars are deflated by the GNP
implicit deflator for personal
consumption expenditures.
LRP Logarithm of relative prices of soft
drinks, equal to a price index for
soft drinks divided by the consumer
price index (1967 = 100 for each
series).
LPOP Logarithm of the percentage of the U.S.
population aged 10-29.
Two prediction equations are shown below. The numbers in parentheses
below the regression coefficients indicate t-values. Only one specifica-
tion, that with all variables expressed in logarithms, was attempted.
LCON = -6.0867 + 1.2238 LPI - 0.1599 LRP + 1.1524 LPOP
(3.83) (-0.98) (1.60)
s2 v 0.00023 R2 = 0.997
y .x
LCON = -5.4433 + 1.2536 LPI + 0.8989 LPOP
(3.95) (1.34)
s2 = 0.00023 R2 = 0.997
y .x
With this specification, the (constant) price and income elasticities
are equal to the appropriate regression coefficients. For example, from
the first equation above, the income elasticity of soft drink consumption
is equal to 1.22; the price elasticity is equal to -0.16.
168
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Appendix F: EMPLOYMENT AND INCOME MODELS
F.I Introduction
One result of some proposed solutions to the beverage container
problem is to change employment in some industries. Although there
will be substantial reductions in some industries, there will also be
offsetting increases in other industries. Redistribution of employ-
ment among industries is normal in a market economy; and yet, sub-
stantial public attention is always focused on anticipated reductions
in employment. For this reason, careful attention has been devoted
by RTI to the employment effects of all the solutions.
Employment models for projecting 1975 levels and estimating changes
in employment due to changes in demand were developed for the soft
drink, malt liquor, wholesale beer distribution, glass container manu-
facturing, and metal can manufacturing industries. The manpower require-
ments to handle empty, returned containers in supermarkets were also
developed. Simple functional relationships were estimated that relate
output in the beverage and beverage container industries with employ-
ment in the supplying industries.
The average earnings in these industries were calculated for 1%9
in order to estimate the income effects of employment changes. Occupa-
tional distributions were used to identify the employment effects by
type of occupation for the selected industries.
F.2 Employment Projections
F.2.1 Bottled and Canned Soft Drinks (SIC* 2086)
The bottled and canned soft drink industry accounts for the bulk of
employment in the manufacture and distribution of soft drinkst. In 1969,
this industry consisted of about 3,400 establishments and 128,600
employees. Employment has been growing at more than 2 percent annually
and output at an even faster rate primarily due to the shifts toward the
less labor-demanding nonrefiliable container system.
*SIC is the standard industrial classification code used to designate
industries.
tThe flavoring, extracts, and syrups industry, SIC 2087, provides an
important input to SIC 2086, but it is unlikely to be greatly affected by
any of the proposed solutions.
171
-------
The soft drink industry is widely dispersed throughout the country
in direct relationship to the population distribution. Because the
basic flavors can be shipped and then mixed with carbonated water in
the local region (thus reducing transportation charaes) and because
the system of refill able bottles is most efficient in relatively small
geographical areas, the soft drink industry is characterized by many
plants with small geographical market areas.
The typical bottling plant usually distributes its product through-
out its market area by truck. The truck driver is the route salesman
who takes the order, makes the delivery, puts the product on the shelves,
and picks up the empties. This distribution system is labor intensive,
rather than capital intensive. Production workers only amounted to
49,000 out of 128,600 in I°fi9; the balance of the employees were in
distribution. The distribution of refillable bottles requires more labor
than the distribution of nonrefillable containers because of the need to
handle the empties. The major employment impact of the proposed solutions
will be in distribution employment, although soft drinks in refillable
containers do require a few more production employees than are necessary
with nonrefillable containers.
We have projected employment in the industry by relating employment
to the number of fillings. The relationship used is shown below:
E] 49.2276 + 0.001759 X]
(6.97) (8.90)
R2 0.89 F = 79.27 D.W. 1.22
(F-l)
where EI is employment, X-j is fillings, the figures within parentheses
are t-statistics, R is the coefficient of determination, F is the F-
statistic, and D.W. is the Durban-Watson statistic.
As shown in Table F-l, employment is projected to increase from
12R.600 in 1969 to 147,700 in 1976 if present trends continue.
Table F-2 shows the distribution labor requirements for each of
the three types of containers.
172
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Table F-1. EMPLOYMENT IN THE BOTTLED AND CANNED
SOFT DRINK INDUSTRY
Year
1958
1959
1960
1961
1%2
1963
1964
1965
1966
1967
1968
1969
Projected
1976
Fi 1 1 i nqs
(millions)
30,262
32,228
29,299
30,754
31,232
32,265
34,384
36,993
37,579
40,005
41 ,074
47,906
55,017
Empl oyment
97,100
100,000
103,000
104,100
105,400
106,800
111,100
113,900
117,700
123,400
125,200
128,600
147,700
Source: Actual data, U.S. Department of Commerce, Census
of Manufactures, Survey of Manufactures; projections, Research
Triangle Institute.
Table F-2. SOFT DRINK DISTRIBUTION LABOR REQUIRE-
MENTS BY TYPE OF CONTAINER
Type of container
Refillable bottles
Nonrefillable bottles
Cans
Labor cost
per case
$0.405
$0.267
to. 244
Source: Booz-Allen and Hamilton,
Cases per Cases per
man-hour man-year
8.15 16,300
12.36 24,720
13.52 27,040
Study of Distribution
Practices in the Soft Drink Industry; and Research Trianqle
Institute.
173
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Table F-3. SOFT DRINK DISTRIBUTION EMPLOYMENT
Cases Etnpl oyment
Type of container T967T97F 1967T97F
Refill able bottles 1,213,728 700,200 75,858 42,957
Nonrefill able bottles 149,394 536,820 6,043 21,716
Cans 303.750 1,096,700 11.250 40,558
Total 1,666,872 2,333,720 93,141 105,231
Source: Research Trianqle Institute.
Labor costs were converted to cases per man-hour by dividinq the
1967 average hourly wage of $3.30 for nonproduction workers in SIC 2086
by the labor cost per case; cases per man-year were calculated by
multiplying cases per man-hour by 2,000, the average number of man-hours
in a man-year. The number of distribution employees shown in Table F-3
was calculated by dividing the total number of cases of each type of
container by the number of man-years required.
The interesting implication of the employment requirements of the
soft drink industry is that current containerization trends toward non-
refill ables are resulting in a lower rate of employment growth in the
soft drink industries than would be the case if all containers were
refill able bottles.
F.2.2 Malt Liquor (SIC 2082)
The malt liquor industries include the brewing of beer and its
distribution in areas near the brewery (wholesale beer distribution
employment will be discussed in the next section). Employment in the
malt liquor industry has been decreasing over time because the growth
in consumption has been too slow to offset the growth in productivity.
There has been a great reduction in the number of breweries, from
402 in 1950, to 220 in 1960, to 158 in 1969, in an effort to improve
productivity through economies of scale.
Employment in 1976 has been estimated by oro.jecting output, in 't
terms of fillings per employee (0,,/F.,,) as a function of time (T = 58,
174
-------
59, ... 69, 76), which is the same as projecting productivity. The
estimating equation was
r^- -1150.608 + 24.720 T
h2
(0.443)
F - 137.99 R2 = 0.93 Standard error = 52.773
(F-2)
where the figure within parentheses is the variance. Output per employee
is projected to be 728,100 fillings by 1976. Based on our projection of
fillings, malt liquor employment is projected to be 62,000. Malt liquor
employment, therefore, will increase between 1969 and 1976 due to the
expected accelerated growth in beer consumption. (See Table F-4).
Table F-4. EMPLOYMENT IN THE MALT LIQUOR INDUSTRY
Year
1958
1Q59
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
Projected
1976
Output
per employee
(thousands)
310.4
337.8
322.3
340.2
364.0
392.8
416.2
434.0
457.6
508.6
539.5
600.5
728.1
Fi 1 1 i ngs
(millions)
22,658
23,949
22,497
23,19°
24,026
24,589
25,762
26,212
27,685
30,771
32,263
34.8Q1
45,169
Employment
(thousands)
71.7
70.9
69.8
68.2
66.0
62.6
61.9
60.4
60.5
60.5
59.8
58.1
62.0
Source: Actual data, U.S. Department of Commerce, Census
of Manufactures, Survey of Manufactures; projections, Research
Triangle Institute.
175
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Employment changes in the malt liquor industry due to a proposal
are related to changes in consumption and/or containerization. The
above equation was used to calculate employment changes as a result
of a change in total fillings (consumption). Containerization changes
primarily affects beer distribution employment which is in two
industries: malt liquor and wholesale distribution of beer. In order
to identify the beer distribution employment share of total employment
in malt liquors, we had to first estimate the employment necessary to
distribute all packaged beer, then estimate and subtract out the whole-
sale beer distribution share.
The combined total malt liquor and wholesale beer distribution
employment was projected to be 80,000 using the same per case labor
requirements as estimated above for soft drinks. The calculations are
shown in Table F-5. Although beer travels longer distances to the
retailer from the brewery than do soft drinks from the bottler, the
soft drink distribution labor requirement probably is a reasonable
approximation of the labor required for beer distribution. The ship-
ment from the brewery to the local distributor is frequently made by
common carrier which would not have a high labor requirement on a per
case basis, though the costs may be high. The distributor receives the
beer at his warehouse and then distributes it to retail outlets. This
latter stage of distribution is similar to the distribution of soft
drinks by a bottler who might be located in the same city as the beer
distributor.
Table F-5. BEER DISTRIBUTION EMPLOYMENT, 1976
Projected Projected distri-
cas'es of beer Cases per bution employment
Type of container (thousands) man-year (thousands)
Refi liable bottles
Nonref i 1 1 abl e bottl es
Cans
Total
357,590
489,333
1,035,128
1,882,051
16,300
24,720
27,040
68,060
2.1.9
19.8
38.3
80.0
Source: Research Triangle Institute.
176
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A total of 70,900 employees is projected to be in the wholesale
beer distribution industry (see the next section). Of these, 58,800
distribute packaged beer and the remaining 12,100 distribute bulk beer.
The difference between the total distribution employment for packaged
beer (80,000) and the wholesale beer distribution share (58,800) is
21,200. It is assumed that the malt liquor industry employs these
people to distribute packaged beer.
F.2.3 Wholesale Distribution of Beer (SIC 5095)
Most beer in the United States is distributed by a decentralized
system of independent wholesalers rather than directly by breweries.
Because the relatively small number of breweries (158 in 1969) are
concentrated in a few parts of the country, it is not economical for
the beer to be shipped directly from breweries to the retail outlets
located in many parts of the country.
Employment in the wholesale distribution of beer was projected
by relating employment to total beer consumption. The relationship is:
E3 = 17.883 + 0.363 C
(0.029) (F-3)
F = 155.417 R2 = 0.99
Standard error of the estimate - 0.485
where E, is employment, C is beer consumption, and the figure within
o
parentheses is the standard error of C.
By solving the equation for projected 197fi consumption levels, we
project employment of 70,900 (see Table F-6).
Table F-6. EMPLOYMENT IN WHOLESALE DISTRIBUTION OF BEER
Selected
Year
1963
1967
19P9
Projected
1976
Consumption
(million barrels)
92.3
109.3
114.9
145.9
Employment
(thousands)
51.5
57.2
5Q.9
70. Q
Source: Research Triangle Institute.
177
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Since labor productivity has been and is projected to continue to
increase slower in the wholesale distribution of beer than in the
production of beer, employment in the wholesale distribution of beer
will increase faster than in the malt liquor industry.
It was assumed that the wholesale beer distribution industry
distributes beer in the same proportion as it is produced, and that
employment is proportional with the types of beer. That is, of all
beer distribution employees, 17 percent distribute beer in bulk, while
the remaining 83 percent or 58,800 distribute packaged beer.
F.2.4 Glass Container Manufacturing (SIC 3221)
In 1*567 the glass container manufacturing industry comprised 40
companies that operated about 120 plants and employed about 66,000 people.
Employment increased to 76,000 by 1970 mainly because of increased
beverage container production, which grew at a much faster rate than
container production for food and other products. The percentage of
total containers represented by beverage containers grew from 14.8
percent in 1^58 to 42.4 percent in 1969. The share should reach 56.9
percent by 1976.
Nonrefillable beer and soft drink bottle production is responsible
for most of the growth in glass container production. It has increased
from 6.9 percent of the total glass containers produced in 1958 to 36.5
percent in 1969. Nonrefillables accounted for 75.5 percent of the growth
in total glass container production from 1958 to 1969.
Output per employee in glass container manufacturing was projected
on the basis of time (T = 58, 59, ... 69, 76), in order to obtain the
1976 output-employment relationship. The relationship determined was:
°4
TT- = -268.6504 + 9.0385 T
E4 2 (F-4)
F - 312.51 IT = 0.97 >Sfamdard error = 31.151 .
Using this equation .with cur projections of 1976 containerization, we
project 1976;glass container employment to be 76,800 (see Table F-7).
The equation can be solved to determine the employment impacts of changes
in the demand for glass containers.
178
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Table F-7. EMPLOYMENT IN THE GLASS CONTAINER INDUSTRY
Container Container output
output per employee Employment
Year (thousand gross) (gross) (thousands)
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
Projected
1976
143,366
153,102
156,799
165,656
174,195
177,886
186,741
198,131
206,299
231.046
223,635
252,360
321 ,096
2,611.4
2,724.2
2,680.3
2,751.7
2,903.2
2,064.8
3,091.7
3,221.6
3,198.4
3,463.9
3,494.3
3,529.5
4,182.8
54.9
56.2
58.5
60.2
60.0
60.0
60.4
61.5
64.5
66.7
64.0
71.5
76.8
Source: Actual data, U.S. Department of Commerce,.C£nsus_
of Manufactures, Survey of Manufactures; projections by
Research Trianqie Institute."
Table F-8. SELECTED DATA ON THE GLASS CONTAINER INDUSTRY
Year
T958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
Employment
(thousands)
54.9
56.2
58.5
60.2
60.0
60.0
60.4
61.5
64.5
66.7
64.0
71.5
Value
added
(millions)
$532.5
561.3
567.5
601.2
613.0
629.6
646.6
679.4
763.1
842.9
905.0
1,111.6
Wages &
salary
(millions)
$259.9
271.9
298.3
314.5
326.7
328.0
340.9
358.3
391.3
426.1
436.1
518.8
Profits*
(millions)
$261.5
376.8
312.7
298.5
309.8
330.2
347.6
440.5
393.9
343.3
NAt
NA
New capital -
expenditures
(millions)
$ 31.2
32.9
34.8
68.9
53.6
53.8
59.5
72.3
116.8
75.5
74.4
131.9
Productivity
index
(1967=100.0)
78.7
82.3
81.5
82.3
86.1
89.1
92.4
96.7
97.2
100.0
101.0
106.1
Source: From U.S. Department of Commerce, 1967 Census of Manufactures and
1969 Annual Survey of Manufactures. U.S. Bureau of Labor Statistics. EmpToyment
and Earnings, Vol. 17 (March 1971) and Indexes of Output Per Man-Hour, Selected
Industri'es"r^939 and 1947-1970, Bu11etirTT692.U.S. Internal Revenue Service,
Statistics of Income: Corporation Income Tax Returns.
*Includes profits for Glass and Glass Products, on returns with net income
subject to income tax.
tNA - Not available.
179
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By using the averaqe output of 4,182.76 gross of containers per
worker projected for 1976, it is estimated that if 171,027,000 gross
of containers were eliminated by a ban on nonrefiliable beer and soft
drink bottles, it would cause an employment, drop of 40,900. This, drop
would be partially offset by an employment increase of 8,000 needed
to produce more refillable bottles (assuming trippage of 15) to re-
place the nonrefillable bottles and cans. Table F-8 provides selected
data on the glass container industry.
F.2.5 Metal Can Industry (SIC 3411)
The metal can industry manufactures its can from tinplate, double-
rolled tin-free steel, and from aluminum sheets, plates, and other
aluminum mill shapes. There were about 300 establishments in the metal
can industry in 1967 concentrated in Illinois, California, New Jersey,
Pennsylvania, and Maryland employing about 60,000 people. Employment
was static in the early 1960's; it grew fairly rapidly toward the "end
of the decade. (Table F-9 contains selected data on the industry.)
Table F-9. SELECTED DATA ON THE METAL CAN INDUSTRY
Year
1958
1959
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
Empl oyment
(thousands)
54.2
53.8
53.6
53.4
53.1
53.2
55.1
54.9
58.7
60.4
63.7
68.1
Value
added
(millions)
$ 668.6
668.3
666.2
758.7
772.4
830.5
932.4
1,011.4
1,043.5
1,146.1
1,337.7
1,454.6
Wages and
salaries
(millions)
$303.9
332.1
333.6
347.6
369.3
377.0
400.6
422.3
446.9
475.8
542.3
597.0
Profits
(millions)
$152.1
137.0
108.1
173.9
140.7
102.3
130.9
188.2
*
275.4
NAt
NA
New capital
expenditures
(millions)
$ 54.3
50.8
68.4
47.9
60.0
66.5
71.8
79.4
99.5
100.0
119.1
143.2
Source: From U.S. Department of Commerce, 1967 Census of Manufactures
and 1969 Annual Survey of Manufactures. U.S. Bureau of Labor Statistics,
Employment and Earnings, Vol 17 (March 1971) and Indexes of Output Per Man-
Hour. Selected Industries, 1939 and 1947-1970. Bulletin 1692. U.S. Internal
Revenue Service, Statistics of Income: Corporation Income Tax Returns.
*High sampling variability.
tNA - Not available.
180
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Table F-10. METAL CAN EMPLOYMENT
Year
I960
1961
1962
1963
1964
1965
1966
1967
1968
1969
Projected
1976
Container
output
(billions)
44.372
45.593
48.162
45.904
49.125
50.464
54.521
56.866
62.456
65.684
93.441
Container output
per employee
(thousands)
827.8
853.8
907.0
862.9
891.6
919.2
928.8
941.5
980.5
964.5
1083.0
Employment
(thousands)
53.6
53.4
53.1
53.2
55.1
54.9
58.7
60.4
63.7
68.1
86.3
Source: Actual data from U.S. Department of Commerce, Census of
Manufactures and Survey of Manufactures; projections by Research
Trianqle Institute.
Total employment for 1976 was estimated by projecting output per
employee as a function of time (T 58, 59, ... 69, 76). The relation-
ship is shown below:
= -7.5388 + 1.5242 T
(F-5)
F = 57.70 R 0.88 Standard error 2.66 .
Output per employee is projected to rise to 1,083,000 cans per year by
1976. With our projections for 93.441 billion cans of all types, this
output per employee generates employment of 86,300 in 1976 (see Table
F-10).
Beer and soft drink containers have been an increasing percentage
of total can output: 22 percent in 1960, 43 percent in 1969, and a
projected 55 percent in 1976. More than 47,200 people will be required
to produce beveraae cans in 1976 if present trends continue.
181
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F.2.6 Grocery Stores (refillables handling only) (SIC 5411)
Refiliable beverage containers impose a burden on retailers that
nonrefilTables do not: the cashier rinqs up deposits and refunds them;
the bookkeeper keeps track of deposits; and busboys (or higher level
employees) handle, sort, move, and check the empties to the truck driver.
However, costs for these tasks may be offset, at least in part, by
higher profit margins although some believe that nonrefillables are more
profitable than refillables when all costs such as storage space,
equipment cost, and inventory charges are considered. A study.of a few
supermarkets in Missouri concluded that profits were greater on non-
refillables than on refillables. In these stores the markups were
hinher on nonrefillables than on refillables. However, the evidence
is not convincing since the margins between wholesale and retail prices
in the referenced study were not typical and some of the handling costs
attributed to refillables do not appear warranted in the example cited.
Only the higher labor requirements for retail stores imposed by refill-
able bottles will be examined in this section because the markup should
include allowance for the nonlabor costs.
We have used the results of a study based on California supermarkets
to estimate the handling requirements of refill able bottles. Table F-ll
gives man-hours per bottle by task at a representative chain. The total
number of man-hours per refillable bottle is 0.0028335. A full-time
employee is required for every 14,000 bottles returned.
We have assumed that additional employees will be required to handle
refill able bottles only at grocery stores grossing more than $500,000
annually (smaller grocery stores are probably able to handle the empties
without adding extra workers). Soft drink sales are about 2 percent of
total grocery store sales. When total grocery sales are $10,000 weekly
or $500,000 annually (a small grocery store), weekly soft drink sales
would be $200 or about 65 cases. If 70 percent of the 65 cases are
refillables, this would require less than 1/10 of an employee. This
task would probably be handled by someone with other tasks since total
employment would probably average only about 5 people.
In 1970, 31,000 grocery stores with sales of more than $500,000
annually accounted for 76.4 percent of all grocery store sales.
182
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Table F-ll. MAN-HOURS PER REFILLABLE BOTTLE FOR NINE
CATEGORIES OF LABOR COSTS
Labor category Man-hours per bottle
Accounting 0.0000073
Clerk ringing deposits n.0000958
Clerk refunding deoosits 0.0001846
Busboy racking empties n.0005158
Moving rack to bottle storage area 0.0003900
Clearing of bottle storage area 0.0001900
Sorting of bottles from rack 0.0010000
Moving empty rack to front 0.0003900
Checking empties to driver 0.0000600
Total 0.0028335
Source: Bottle Survey '71. A California Supermarket
Report on the Cost of Handling Returnable Soft Drink Bottles.
La Habra, Calif., Alpha Beta Acme Markets, 1971.
Grocery stores have about 55 percent of total soft drink sales, and
cash-and-carry stores have another 6 percent, as shown in Appendix B.
If all grocery stores sell 61 percent of all soft drinks and the large
grocery stores have 76.4 percent of all grocery stores sales, then the
large grocery stores would sell 47 percent of fillings. If we assume
that these percentages will remain the same in 1976 and that grocery
stores sell the same proportion of refill able bottles as the national
average, then in 1976, 7,898,330,000 refill able bottles of soft drinks
will be sold in large grocery stores. If the same amount of labor
per bottle is required in 1976 as 1969, these refiliable bottles will
require the employment of 11,058 people. If the percentage of soft
drink sales in refi11 able bottles increases from 30 to 100 percent, an
additional 25,801 employees will be required to handle the empty soft
drink bottles.
Currently, only a small share of beer is sold in refi11 able bottles
through grocery stores and none is forecast for 1976. It is likely that
refiliable beer bottles would require the same amount of handling in 1976
as refillable soft drink bottles if they were sold in grocery stores.
Grocery stores in 1970 sold 81 percent of all bottled and canned beer sold
for off-premise consumption. Large stores (sales over $500,000 annually)
accounted for 62 percent of off-premise sales and probably at least 42
183
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percent of all beer sales in nonrefill able containers. If all beer is
sold in refillable packages, large grocery stores would handle about
19.0 billion empties and need to employ about 26,559 people in 1976
for this purpose.
F.2.7 Metal Suppliers (SIC 3312, 3334, and 3352)
The blast furnace and steel mill industry (SIC 3312) supplies all
the steel tinplate to the metal can industry. The primary producers
of aluminum (SIC 3334) and the aluminum rolling and drawing industry
(SIC 3352) provide all the aluminum used by the metal can industry.
In 1969, beverage containers accounted for 2.0 percent of all steel
consumption and 5.6 percent of all aluminum consumption. Employment in
these supplying industries due to beverage cans usage was assumed to be
proportional to the percentage of output consumed by the beverage
container industry. The proportional employment was 10,600 employees
in the steel and 4,700 employees in the aluminum industries. Employ-
ment in the metals industries due to beverage cans was projected to
increase at the same rate as the employment in the metal can industry
due to beverage containers. This assumption implies that productivity
is the same in both industries.
F.2.8 Other Industries
There are other industries associated with the production and sale
of beverages.and beverage containers. Some will be more affected than
others by a proposal, but none of them will lose or gain substantial
amounts of employment. The flavoring, extract, and syrups industry
supplies flavors to the soft drink industry and might be affected
directly by a change in the total consumption of soft drink. The
vending industry might undergo changes if containerization changes.
For example, cup machines might replace bottle and can machines if all
bottles and cans have to carry a deposit. Suppliers of raw materials
such as soda ash, sand, iron ore, coal, paper, and paint would also be
affected if there is a change in containerization of beverages. But the
absolute and relative impacts in these industries, however, will be
substantially less than the industries studied more intensively above.
184
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F-3 Occupations in the Beverage and the Beverage Container Industries
Employment changes differ within the occupational structures of
the industries. These structures are outlined as eight broad occupa-
tional categories of employment within four industries: glass and
glass products, primary metals, fabricated metals, and the beverage
industry (see Table F-12).
The glass industry and both types of metal industries are likely
to lose employment under proposals that have the effect of reducing the
use of nonrefill able containers. The largest percentages of employment
are in the categories of operatives, craftsmen, and professionals. The
beverage industry is likely to gain some employment. It also has a
large percentage of workers in the operatives category, and has higher
percentages of sales workers and managers and lower percentaqes of
craftsmen than do the glass and metal industries.
The occupational distribution in the beverage industry is not
representative of the wholesale or retail industries for distributing
beer. The most similar distribution would be those for wholesale and
retail trade, but even these are not representative since wholesale
distribution of beer would require many more drivers and delivery men
than wholesale trade in general. Personnel handling empties at the
retail store will probably be less skilled than the average for retail
trade. There is no suitable information available on the occupational
distribution for beer distribution or retail trade.
F.4 Personal Income
Employment changes due to changes in beverage containerization or
consumption will cause income changes. The income losses will be
temporary if, as is expected, displaced workers eventually find new jobs.
Several measures of personal income could be used to make these
comparisons. One measure is the average hourly wage of production workers
in each industry (see Table F-13). These wage rates, however, cover only
the production workers and thus may not reflect the average earnings in
the industry. In soft drinks, for example, production workers are only
about one-third of total employment because distribution workers are so
important. A better measure is average annual earnings which is derived
185
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Table F-12. PROJECTED PERCENTAGE DISTRIBUTION OF INDUSTRY
EMPLOYMENT BY OCCUPATION, 1975
Occupation
Professional, technical, kindred
Engineers, technical
Natural scientists
Technicians,
excl. medical, dental
Medical, other health workers
Teachers
Social scientists
Other prof., tech., & kindred
Manager, officials, proprietors
Clerical, & kindred workers
Stenos, typists, secretaries
Office machine operators
Other clerical, kindred
Sales workers
Craftsmen, foremen & kindred
Construction craftsmen
Foremen n.e.c.
Metalworking craftsmen,
excl. mechanics
Printing trades craftsmen
Transport & Public
utilities craftsmen
Mechanics & repairmen
Other craftsmen & kindred
Operative & kindred
Drivers & deliverymen
Transp. & pub. util. operatives
Semiskilled metalworking occup.
Semiskilled textile occup.
Other operatives & kindred
Service workers
Private household workers
Protective service workers
Food service workers
Laborers, except farm & mine
Total
Source: U.S. Bureau of Labor
W**l TM II TL._ Kf _ J. • 1 T I j . - _ *n
Glass
and glass
products
8.00
2.04
0.28
1.81
0.09
0.00
0.11
3.66
5.22
9.52
2.57
0.49
6.46
1.86
16.29
1.42
5.72
1.81
0.13
0.02
4.61
2.59
51.87
1.59
0.05
0.48
0.13
49.62
2.08
0.00
0.68
0.17
5.15
100.00
Statistics,
Fabricated
metal
Primary products,
metal
7.23
3.01
0.39
1.74
0.14
0.02
0.10
1.84
3.41
10.36
2.47
0.60
7.29
1.82
31.68
4.03
6.07
10.25
0.03
0.18
4.43
6.69
33.60
1.64
0.41
8.59
0.01
22.96
1.85
0.00
0.86
0.09
10.04
100.00
Tomorrow's
n.e.c.
12.48
5.31
0.61
3.10
0.11
0.03
0.08
3.24
7.31
13.11
3.81
0.72
8.58
2.35
23.57
1.95
5.13
10.32
0.17
0.01
3.66
2.34
36.53
1.23
0.00
15.17
0.01
20.12
1.45
0.00
0.58
0.09
3.20
100.00
Manpower
Beverage
industries
3.57
0.35
0.53
0.81
0.07
0.00
0.04
1.77
10.41
10.40
2.48
0.94
6.98
6.32
16.52
1.09
5.32
0.88
0.03
0.00
5.46
3.75
43.16
19.33
0.02
0.12
0.00
23.69
2.09
0.00
0.45
0.12
7.52
100.00
; 1
Needs,,
•* -..— ..~ _ . v..w . *iiM«***«rij wwww^u viwuui riuvri i/\ aiiu U Ullci riailLIUVYCf L/u t(
Bulletin No. 1606. Washington, U.S. Government Printing Office, 1969, pp.
47,50,53, and 65.
n.e.c. not elsewhere classified.
186
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by dividing total payroll by total employment for the year (see Table
F-14). Unfortunately, however, these data are not available for the
nonmanufacturing industries for 1969. They are available for 1967
from the Census of Business and have been adjusted to 1969 using the
proportional change found in all manufacturing industries. One addi-
tional drawback is that while the employment impacts in most of the
affected industries will probably be across the board, for retailing
almost all the new employees will probably earn lower wages than the
average level of wages in retailing. However, this wage differential
cannot be determined with any certainty and so the average earnings
figure in retailing has been used.
These average earnings in Table F-14 were used to calculate the
net effects on income of a change in container systems to the all-
refillables system.
Table F-13. AVERAGE HOURLY EARNINGS OF PRODUCTION WORKERS IN THE
BEVERAGE AND BEVERAGE CONTAINER INDUSTRIES, 1969
Industry Hourly Rate Yearly Rate*
Soft drink
Malt liquor
Wholesale beer dis-
tribution (misc.
wholesale)
Glass containers
Metal cans
Metals (weighted steel
and aluminum)
Retail grocery stores
Source: Employment and
$2.61
4.43
3.30
3.35
3.83
4.06
2.58
Earni ngs :
$5,220
8,860
6,600
6,700
7,660
7,660
5,160
United States, 1909-70,
Bulletin 1312-7, U.S. Department of Labor, Bureau of Labor Statistics,
Washington, Government Printing Office, n.d.
*Hourly rate multiplied by 2000, the average number of hours
worked yearly.
187
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Table F-14. ESTIMATED AVERAGE ANNUAL EARNINGS FOR ALL EMPLOYEES
IN THE BEVERAGE AND BEVERAGE CONTAINER INDUSTRIES, 1969
Average annual
Industry earnings
Soft drink 6,486
Malt liquor 9,962
Wholesale beer distribution 7,858*
Glass containers 7,256
Metal cans 8,813
Metals 9,459
Retail grocery stores 5,801t
Source: 1967 Census of Manufactures; 1970 Annual Survey of
Manufactures. U.S. Department of Commerce, Bureau of the Census.
*It is assumed that beer distribution keeps the same relationship
to malt liquor in 1969 as in 1967.
tGrocery store average hourly wages were $2.58 in 1969. If the
yearly earnings are proportional to hourly earnings and grocery stores
are proportional to malt liquor, then average yearly earnings would be
$5,801 in 1969.
Table F-15 contains the employment changes in seven beverage and
beverage-related industries, the average earnings, and the total earnings
associated with a shift to an all-refilTables system. If consumption
falls by 4 percent, there would be a decrease in income of approximately
$114 million. The average employee under the present system earned $7,688
annually while the average employee under an all-refillables system would
earn 4.5 percent less or $7,343; this is a difference of $345. The total
income loss would be equal to 14,828 employees earning $7,688 annually.
While the $114 million loss in personal income is substantial, it
will probably be offset by increases in other industries as consumers
shift their purchases from beverages to other products in response to the
price decreases of beverages. A multiplier could be attached to the
income loss to calculate the total effect (including indirect effects)
on the economy. There is little reason to do this, however, as we argue
that the displaced employees will find new employment. Also if beverage
188
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Table F-15. EMPLOYMENT AND EARNINGS IN SELECTED INDUSTRIES
IN 1969 UNDER DIFFERENT CONTAINER SYSTEMS*
00
10
Industry
Soft drink
Malt liquor
Wholesale beer
distribution
Glass containers
Metal cans
Metals
Retail grocery stores
Total
Average earnings
per employee
Present system
1969 consumption
Employment Earnings
(thousands) (millions)
128.6 $834.1
58.1 578.8
59.9 470.7
26.1 189.4
29.5 260.0
15.3 144.7
19.6 113.8
337.1 2,591.5
$7,688.0
All-refillables system
Same consumption
Employment Earnings
(thousands) (millions)
146.6
63.2
77.2
12.7
0
0
52.1
351.8
$950.8
629.6
606.6
92.2
0
0
302.2
2,581.4
$7,338.0
4% drop in
Employment
(thousands)
141.2
61.3
74.5
10.4
0
0
50.0
337.4
consumption
Earnings
(millions)
$915.8
610.7
585.4
75.5
0
0
290.1
2,477.5
$7,343.0
Source: Research Triangle Institute.
Note: Only employment and earnings directly derived from beverage and beverage containers are included
in this table.
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prices are lower, consumers will experience an income effect and spend
the savings on other products thus generating more income.
The total income loss of $114 million is 4.4 percent of total
earnings in these 7 industries. Furthermore, only the beverage
container element of the last 4 industries is included in the
calculations. If total employment in the glass container, metal can,
metal, and retail grocery store industries were included, the percentage
loss would be substantially less than 1 percent. If consumption remained
constant, the income loss would only be $10.1 million or 0.4 percent of
total earnings under the present system.
F.5 Reference
1. Corplan Associates of IIT Research Institute. A study of the
soft drink industry 1965-70. Washington, American Bottlers
of Carbonated Beverages, 1966. p. 23.
P0828
190
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