Pay-As-You-Throw Schemes: South Korea

Overview

A policy tool that has been highly effective in decreasing municipal solid waste generation – as well as increasing recovery and recycling rates – has been pay-as-you-throw (PAYT) schemes, where households are charged for the amount and type of waste they generate.

In most countries, households pay either a flat fee or a fee proportional to house size for waste collection services. In South Korea and Japan, for example, households are charged for their waste on a volume or weight basis. Municipal waste is either collected in specific, district-issued trash bags, which households must purchase for a set price per bag, or disposed of in ‘smart bins’ equipped with RFID (radio-frequency identification) tags. Disposal for recyclables tends to be free of charge.

Waste treatment trends in South Korea

Source: BloombergNEF, OECD.

Impact

South Korea was an early adopter of ‘pay-as-you-throw’ (PAYT) schemes, which is widely credited for the sharp drop in the waste intensity of cities and the steady increase in recycling. PAYT schemes provide a direct financial incentive for households to cut the amount of waste they generate. Compared to the early 1990s, when the government began rolling out the policy, the annual waste intensity has fallen from over 600kg per capita to under 400kg per capita, despite increasing GDP and consumption. Over the same period, the share of municipal solid waste being landfilled has decreased from 94% to 15%, while the recycling rate has increased from 5% to 60%.

More broadly, South Korea has been proactive in putting the circular economy into law. In addition to regulations on single-use plastics and plastic bag bans, the country has a comprehensive extended producer responsibility scheme for packaging and a successful household waste fee system. The government also introduced a ”Zero Waste Society” strategy in 2015, with a plan to limit landfilled waste to 3% of municipal solid waste (MSW) by 2030. However, China’s plastic waste import ban significantly disrupted the South Korean recycling industry, forcing the government to intervene by introducing a waste collection subsidy.

Pay-as-you-throw schemes are found at all levels of government – countries (eg, Austria, Vietnam), states (California, Washington) and cities (Dresden, Bristol).

Opportunity

An extension of the polluter-pays principle, PAYT schemes can decrease waste generation, increase consumption of recyclable products and improve waste sorting. However, there must also be sufficient waste processing infrastructure, which ultimately determines how waste is treated. For example, landfill diversion cannot be achieved without a corresponding increase in recycling or composting capacity. Hence the South Korean recycling industry will need an additional boost to meet its 2030 target to recycle 70% of municipal waste.

In addition, if disposing of recyclable waste is free, there is an incentive to minimize the consumption of non-recyclable products and to properly sort waste. Charging households per unit of waste management services they consume, similar to other utilities like water and electricity, assigns a value to the waste in the resident’s mind and prevents them from thinking of waste collection as ‘free’. Other policy approaches that try to address this, such as fees based on house size or water use, have not been as successful because these indicators are not necessarily correlated with how much waste a household actually generates.

Implementing a PAYT scheme requires certain data and digital systems (eg, for billing) and infrastructure (eg, bins and containers must be coded and collection trucks equipped with reading and weighing devices).

Source

BloombergNEF. Extracted from Circular Economy: Global Trends published on September 5, 2019 and from G20 Zero-Carbon Policy Scoreboard published on February 1, 2021. Learn more about BloombergNEF solutions   or   find out how to become a BloombergNEF client.