Background

You are on work experience at Coles QLD Head Office. Over a morning tea break a discussion begins about the bad press plastic bags have been getting. The negatives of the impact of plastic bags on the environment and marine creatures are well known. However, a lesser known impact was that the average Australian is ingesting 11,000 pieces of plastic each year from seafood. The last point is met with disbelief and someone in the room pulls up a short video on their smart phone by

Dave West from the Boomerang Alliance.

A number of people that had brought in tuna sandwiches for lunch quietly discard them in the bin.

Next, a smart phone “fact” battle starts. “Facts” are thrown around the room with wild abandon. For example, an estimated 3.76 billion (equivalent to 2 700 tonnes) of plastic bags are disposed of at landfill sites every year, and it is estimated that around 50 million plastic bags enter the Australian waterways (What is the problem,

2015). However, there is also plenty of “evidence” of worse plastic bag polluters than Australians. An article is cited that seemingly points the finger at China as being the worse plastic polluter (Jambeck et al.2015). Someone else responds by saying that care needs to be exercised when looking at Australian data. Whilst ABS statistics would seemingly suggest that we are diligent at recycling and been getting better at it over time, for many Australians the idea of recycling plastic bags is to use them as bin liners. Unfortunately, this does not align to the definition of recycling as repeated use of conversion into long lasting materials (Boomerang Alliance, 2015)

The conversation takes a different turn when it is noted that Environment Minister

Steven Miles is pushing to ban plastic bags, bringing Queensland in line with SA, Tasmania, ACT and the NT. At the Federal level a marine plastic pollution Senate inquiry has also called for an immediate action on plastic bags (Parliament of

Australia, n.d.)

The discussion now focuses on the best policy to reduce the impact of plastic bags in the environment. You remember that your lecturer in BSD113 had spoken about how, in some markets where the negative effects are not captured in the price of the good it can lead to over consumption of the good and an inefficient equilibrium. The lecturer had then demonstrated how a tax on the good can move the market back to a socially efficient level of consumption. Confident of your understanding of the economics you say (to the now captivated tea room audience – talking about economics always has that effect on people) that a plastic bag tax may be a potential solution. Someone argues that a ban of plastic bags would be a more effective policy. You acknowledge that may be the case, but without a proper economic analysis it would be difficult to conclude one way or another (nice save!).

Research task

Your musings were overheard by the visiting Coles CEO. The CEO was impressed by your insights and has asked that you write a critical economics overview of a plastic bag tax.

I suggest breaking your report down as follows:

1. A brief overview of issues related to plastic bag consumption (and their subsequent disposal) AND the current and proposed changes to policy in Australia.

Hint: As an economist, we generally start by framing the problem. We also refer to this as setting the context. In this part of your essay, you need to clearly articulate what the issue is from a societal perspective. You need to present information (including data) on the impact of plastic bag pollution etc. and the proposed changes to policy.

2. A description of the relevant economic theory to show how a plastic bag tax would decrease plastic bag consumption to a socially efficient level.

Hint: So what is the economic theory that underpins your economic analysis? In this case it is over consumption of a good that is potentially leading to a socially inefficient outcome. To correct for that, you can use an economic theory to demonstrate how decreasing plastic bag consumption will move the market to a socially efficient level of consumption. And yes — you will be expected to include a relevant graph of the economic theory!

In your theoretical model assume that the price of plastic bags prior to the tax is positive. (Just because plastic bags are given “free” at the checkout, does not

mean that the price of a plastic bag to a customer is zero. The cost of a plastic bag, whilst small, is positive and included in the price of goods sold by the retailer).

3. A critical analysis, informed by research, as to whether a plastic bag tax will be effective in practice in correcting the market failure.

Hint: You are working with a word limit so you will need to be selective and concise with your arguments. Again, your analysis needs to be objective, we expect you to draw on appropriate academic literature and/or present empirical evidence to support your arguments about the limitations of the proposed policy and to suggest an alternative policy that addresses the issue in a different way. To keep it manageable, it is suggested your critical analysis should include:

0 a brief discussion on the potential limitations of the plastic bag tax with reference to an example of the plastic bag tax in practice (e.g. Ireland, Wales,

South Africa etc. note this list is not exhaustive)

ONE policy alternative – keep it simple — give an overview of how the policy will work and a summary of the potential strengths and weaknesses of that policy. Note, you are not required to say that the alternative policy is better, but do note how it would be different to the plastic bag tax.

Suggested References

Boomerang Alliance, (2015, August). Facts on plastic. Retrieved from http://www.boomerangalliance.org.au/the_facts_on_plastic_bags

Bishop, M. (2009). Economics: An A-Z Guide.London: Economist/Profile Books.

Bourne, R. (2015, September 24). The plastic bag levy illustrates the difficulty of Pigovian taxation. Institute of Economic Affairs. Retrieved from: http://www.iea.org.uk/blog/the-plastic-bag-levy-illustrates-the-difficulty-of-pigouvian-taxation

Bourne, R. (2014, 7 June). Plastic bags – why should we care? Institute of Economic

Affairs. Retrieved from http://www.iea.org.uk/blog/plastic-bags-%E2%80%93-why-should-we-care

Convery, F., McDonnell, S., & Ferreira, S. (2007). The most popular tax in Europe? Lessons from the Irish plastic bags levy. Environmental and Resource Economics,

38(1), 1-11. Retrieved from https://wiki.umn.edu/pub/ESPM3241W/S12TopicSummaryTeamFour/Lessons_fro m_Irish_Plastic_bag_levvy.pdf

Cormack, L. (2016, February 17). Marine plastic pollution senate inquiry targets Australian ocean pollution. The Sydney Morning Herald. Retrieved from http://www.smh.com.au/environment/marine-plastic-pollution-senate-inquiry-targets-australian-ocean-pollution-20160217-gmwge9.html#ixzz43mEjpJgZ

Dikgang, J., Leiman, A., & Visser, M. (2012). Analysis of the plastic-bag levy in South Africa. Resources, Conservation and Recycling, 66, 59-65. Retrieved from https://www.researchgate.net/profile/Johane_Dikgang/publication/275345140_Ana

lysis_of_the_plastic-bag_levy_in_South_Africa/links/55394c550cf2239f4e7d8f52.pdf

Hassan, R., Leiman, A., & Visser, M. (2007). The economics of plastic bag legislation in South Africa. South African Journal of Economics, 75:1, March, 66-

83.

Homonoff, T. (2015, November 17) Paper or plastic? How disposable bag bans, fees and taxes affect consumer behaviour. The Conversation. Retrieved from https://theconversation.com/paper-or-plastic-how-disposable-bag-bans-fees-and-taxes-affect-consumer-behavior-48858

Jakovcevic, A., Steg, L., Mazzeo, N., Caballero, R., Franco, P., Putrino, N., & Favara, J. (2014). Charges for plastic bags: Motivational and behavioral effects.

Journal of Environmental Psychology, 40, 372-380.

Jambeck, J.R. Geyer, R. Wilcox, C. Siegler, T.R. Perryman, M. Andrady, A. Narayan, R., Law, K.L. (2015). Plastic waste inputs from land into the ocean.

Science, 347:(6223),768–771. Retrieved from http://science.sciencemag.org/content/347/6223/768.full

Marszalek, J. (2016, Feb 24) States band together on plastic bag ban. Herald Sun. Retrieved from http://www.heraldsun.com.au/subscribe/news/1/index.html?sourceCode=HSWEB _WRE170_a&mode=premium&dest=http://www.heraldsun.com.au/news/national/ states-band-together-on-plastic-bag-ban/news-story/630fc0dfec24d1b5dda89c541a3efe32?memtype=anonymous

Parliament of Australia. (n.d.). The threat of marine plastic pollution in Australia. Retrieved April 07, 2016, from http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment

_and_Communications/Marine_plastics

Spence, P. (2015, October 5). Plastic bag charge; the unintended consequences of the 5p deterrent. Telegraph. Retrieved from: http://www.telegraph.co.uk/finance/economics/11912052/Plastic-bag-charge-the-unintended-consequences-of-the-5p-deterrent.html

What is the problem? (2015, May) Retrieved from http://www.cleanup.org.au/au/Campaigns/plastic-bag-facts.html

Instructions for research essay

Informed critical content

You are required to include a range of relevant scholarly sources that supports the flow and critical content of the discussion. All sources cited must be referenced using APA. For further information refer to Cite|Write http://www.citewrite.qut.edu.au/

If in doubt about how to reference a source please seek help.

Maximum word length

Your research essay is a MAXIMUM LENGTH of 1250 words (excluding your reference list – but inclusive of in-text citations). A suggested word count breakdown is presented below.

1. Introduction – 50/100 words

2. A brief overview of plastic bag use and disposal in Australia, environmental harm done, current and proposed policies – 250-300 words

3. A description of the relevant economic theory to show how a plastic bag tax would decrease plastic bag consumption to a socially efficient level – 200-250 words

4. A critical analysis informed by research as to whether a plastic bag tax would be effective in practice in correcting the market failure – 500/600 words

5. Conclusion – 50/100 words

This is only a suggestion, but note the CRA marking sheet for the essay: the critical analysis section has a 40% weighting and needs considerable content.