Extended producer responsibility

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Extended Producer Responsibility (EPR) is a strategy designed to promote the integration of environmental costs associated with products throughout their life cycles into the market price of the products (OECD 1999).

Extended producer responsibility imposes accountability over the entire life cycle of products and packaging introduced on the market. This means that firms, which manufacture, import and/or sell products and packaging, are required to be financially or physically responsible for such products after their useful life. They must either take back spent products and manage them through reuse, recycling or in energy production, or delegate this responsibility to a third party, a so-called producer responsibility organization (PRO), which is paid by the producer for spent-product management. In this way, EPR shifts responsibility for waste from government to private industry, obliging producers, importers and/or sellers to internalise waste management costs in their product prices (Hanisch, 2000).

EPR has been implemented in many forms, which may be classified into three major approaches:

It is perhaps because of the tendency of economic policy in market-driven economies not to interfere with consumers’ preferences that the producer-centric representation is the dominant form of viewing the environmental impacts of industrial production: in statistics on energy, emissions, water, etc., impacts are almost always presented as attributes of industries (‘on-site’ or ‘direct’ allocation) rather than as attributes of the supply chains of products for consumers. On a smaller scale, most existing schemes for corporate sustainability reporting include only impacts that arise out of operations controlled by the reporting company, and not supply-chain impacts (World Business Council on Sustainable Development and World Resources Institute 2001). According to this world view, “upstream and downstream [environmental] impacts are […] allocated to their immediate producers. The institutional setting and the different actors’ spheres of influence are not reflected” (Spangenberg and Lorek 2002, p. 131).

On the other hand, a number of studies have highlighted that final consumption and affluence, especially in the industrialised world, are the main drivers for the level and growth of environmental pressure. Even though these studies provide a clear incentive for complementing producer-focused environmental policy with some consideration for consumption-related aspects, demand-side measures to environmental problems are rarely exploited (Princen 1999, p. 348).

The nexus created by the different views on impacts caused by industrial production is exemplified by several contributions to the discussion about producer or consumer responsibility for greenhouse gas emissions. Emissions data are reported to the IPCC as contributions of producing industries located in a particular country rather than as embodiments in products consumed by a particular population, irrespective of productive origin. However, especially for open economies, taking into account the greenhouse gases embodied in internationally traded commodities can have a considerable influence on national greenhouse gas balance sheets. Assuming consumer responsibility, exports have to be subtracted from, and imports added to national greenhouse gas inventories. In Denmark for example, Munksgaard and Pedersen (2001) report that a significant amount of power and other energy-intensive commodities are traded across Danish borders, and that between 1966 and 1994 the Danish foreign trade balance in terms of CO2 developed from a 7 Mt deficit to a 7 Mt surplus, compared to total emissions of approximately 60 Mt. In particular, electricity traded between Norway, Sweden and Denmark is subject to large annual fluctuations due to varying rainfall in Norway and Sweden. In wet years Denmark imports hydro-electricity whereas electricity from coal-fired power plants is exported in dry years. The official Danish emissions inventory includes a correction for electricity trade and thus applies the consumer responsibility principle (Danish Environmental Protection Agency 1998).

Similarly, at the company level, “when adopting the concept of eco-efficiency and the scope of an environmental management system stated in for example ISO 14001, it is insufficient to merely report on the carbon dioxide emissions limited to the judicial borders of the company” (Cerin 2002, p. 59).7 “Companies must recognise their wider responsibility and manage the entire life-cycle of their products … Insisting on high environmental standards from suppliers and ensuring that raw materials are extracted or produced in an environmentally conscious way provides a start” (Welford 1996, as cited in Cerin 2005, p. 34). A life-cycle perspective is also taken in Extended Producer Responsibility (EPR) frameworks: “Producers of products should bear a significant degree of responsibility (physical and/or financial) not only for the environmental impacts of their products downstream from the treatment and disposal of their product, but also for their upstream activities inherent in the selection of materials and in the design of products” (Organisation for Economic Co-operation and Development 2001, p. 21-22). “The major impetus for EPR came from northern European countries in the late 1980s and early 1990s, as they were facing severe landfill shortages. [… As a result,] EPR is generally applied to post-consumer wastes which place increasing physical and financial demands on municipal waste management” (Environment Protection Authority New South Wales 2003, p. 2-4).

EPR has rarely been consistently quantified. Moreover, applying conventional life cycle assessment, and assigning environmental impacts to producers and consumers can lead to double-counting. Using input-output analysis, researchers have attempted for decades to account for both producers and consumers in an economy in a consistent way. Gallego and Lenzen (2005) demonstrate and discuss a method of consistently delineating producers' supply chains, into mutually exclusive and collectively exhaustive responsibilities to be shared by all agents in an economy. Their method is an approach to allocating responsibility across agents in a fully inter-connected circular system. Upstream and downstream environmental impacts are shared between all agents of a supply chain - producers and consumers.

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[edit] References

  • Hanisch, C. (2000). Is Extended Producer Responsibility Effective?. Environ Sci Technol, 34 (7), pp.170 A-175 A.
  • Castell, A., R. Clift, and C. Francae. (2004). Extended Producer Responsibility Policy in the European Union: A Horse or a Camel? J of Industrial Ecology, 8 (1-2), pp.4-7. [1]
  • Tong, X., R. Lifset, and T. Lindhqvist. (2004). Extended Producer Responsibility in China: Where is "Best Practice?" J of Industrial Ecology, 8 (4), pp.6-9. [2].
  • Lenzen, M., J. Murray, F. Sack and T. Wiedmann. (2006). Shared Producer and Consumer Responsibility - Theory and Practice. ISA Research Paper 01-06
  • World Business Council on Sustainable Development an World Resources Institute (2001). The Greenhouse Gas Protocol. Conches-Geneva, Switzerland.
  • Spangenberg, J. H. and S. Lorek (2002). Environmentally sustainable household consumption: from aggregate environmental pressures to priority fields of action. Ecological Economics, 43, pp. 127-140.
  • Princen, T. (1999). Consumption and environment: some conceptual issues. Ecological Economics, 31, pp. 347-363.
  • Munksgaard, J. and K. A. Pedersen (2001). CO2 accounts for open economies: producer or consumer responsibility. Energy Policy, 29, pp. 327-334.
  • Danish Environmental Protection Agency (1998). Denmark's Second National Communication on Climate Change submitted under the UN FCCC. Danish Ministry of Environment and Energy
  • Cerin, P. and L. Karlson (2002). Business incentives for sustainability: a property rights approach. Ecological Economics, 40, pp. 13-22.
  • Cerin, P. (2005) Environmental Strategies in Industry: Turning Business Incentives into Sustainability. Report 5455. Swedish Environmental Protection Agency.
  • OECD (2001). Extended Producer Responsibility: A Guidance Manual for Governments. Paris, France.
  • EPA NSW (2003). Extended Producer Responsibility Priority Statement. EPA NSW Consultation Paper 2003/10. Sydney South, Australia.
  • Gallego, B. and M. Lenzen (2005). A consistent input-output formulation of shared producer and consumer responsibility. Economic Systems Research, 17(4), pp. 365-391.

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