"f. Significant increases in low skilled employment in the City could result from a shift to returnables.

"2. Limitations to a Returnable Bottle System

"a. The convenience to the consumer of one-ways may prevent ades quate return.

"b. The convenience to the retailer of one-ways may prevent adequate return.

"c. Returnables are heavier than one-ways and if not returned would pose a greater disposal problem.

"d. Beverage and beer containers are a relatively small part of the solid waste problem, though definitely a problem.

"e. Potentially refillable containers are limited primarily to car. bonated beverages and beer whose large utilization of water in the manufacturing process make local bottling more profitable than ship ping the filled bottle from regionalized central plants,

"f. The returnable mechanism is frustrated by sorting problems. "h. Returnable bottle legislation, if it is to be adopted, should not be local but should be national.

“i. A returnable system allows little recycling flexibility.

"j. A returnable system ultimately may be a more costly form of recycling

"k. The returnable will have to be thrown out eventually.

"1. A complete reversion to returnables would reduce employment in the glass making and the steel and aluminum industry."

The following additional arguments presented in favor of taxing nonreturnable containers and beverage containers are taken from testimony represented at hearings before the Senate Commerce Committee in March 1972.

a. A tax on packaging would not be as discriminatory as a tax on beverage containers.

b. Funds collected from a tax on packaging could be contributed to local governments thus helping to lower the costs of solid waste disposal.

c. The costs connected with disposal would be included in the cost of the product.

Arguments against a disposal charge on non-returnable packaging include the following:

a. There would be an increase in the cost of various products due to the extra charge.

b. The charge is unjust.

c. The taxing of packaging will not significantly reduce the amount of solid waste which must be disposed of since packaging composes only about 13% of our solid wastes.

d. Establishing equitable disposal charges would be virtually impossible.

e. No action should be taken until after the Environmental Protection Agency reports on its study of packaging and the effect of restrictive legislation on the economy. (This study is required under Sec. 205 of the Resource Recovery Act of 1970 and should be released in the fall of 1972.)

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P. James C. Hite, et al., "The Economics of Environmental Quality," Domestic Affairs Study, American Enterprise Institute for Public Policy Research (1972), pp. 107-113:

Because of their relative simplicity, regulations have been the device favored by the legislative branch in dealing with pollution abatement. There is also the advantage for the government of not having to pay or be paid. Subsidies, on the other hand, are preferred by those who are required to reduce their pollution and also by politicians who like to point with pride to their expenditures in behalf of pollution control; subsidies are also favored as a birthright by those who want the environment to be unspoiled. Both businesses and those who like the recreational and aesthetic uses of the environment have been able to persuade the government to adopt these subsidies to some degree. Effluent charges, on the other hand, have garnered their main support from economists, with a few converts from legislative and environmental circles only recently joining the group. But whether these newcomers will remain in the fold remains to be seen; their stated reasons for support show that they do not understand the economic rationale of an effluent charge.

Basically and simply, an effluent charge is a levy on a party for using the environment by discharging an effluent into it, and depriving someone else of the use he would like to make of the environment. While the concept is sometimes called an effluent tax, or an emission tax, this nomenclature is not strictly correct. A tax is a general charge with no immediate quid pro quo for the payer; thus there is a tax on tobacco and on income. A charge by the post office or for grazing rights on government land is another thing, however. It is a fee for a service rendered or a damage sustained.

If the economic nature of the charge could be made clear, some of the confusion surrounding environmental pollution control might be dispelled. Certain supporters of charges show this confusion. Some have switched from opposing effluent charges to supporting them, but on conditions set so high as to discourage any discharge of pollutants. Others have supported what they call effluent charges that are set at a level equal to the cost of treating these wastes. That policy would rule out any discharge that would be less costly to endure than

to treat.

One purpose of an effluent charge is to bring to the attention of the one who uses the environment just how much the use costs, in terms of a burden imposed on others, so that he will use the environment only if he gets more good out of it than the others would. A charge also serves in three other ways to promote an efficient use of resources. By forcing the user to pay for the environment his total consumption of goods and services, including his consumption of environmental assets, is reduced to conform to the limits imposed by his income. The cost he imposes on society by his consumption is more likely to accord with the contribution he makes to society in the production of goods. He is therefore less likely to receive a gain at the expense of others.

More importantly, a charge for the use of the environment quickly brings home to the user the reason he does not get more of the environmental quality that he would like to have. If the environment were

allocated by regulation instead of by charges, its users, both mills upstream and residents downstream, would consider themselves entitled to greater use, and accordingly would, as now, spend time petitioning Congress for rules more favorable to them. Even were more given, they would be dissatisfied so long as still more would benefit them, but a charge for greater use of the environment provides a simple and evident explanation to an individual as to why he does not get more: he does not pay the required price. More of the good is not worth more of the cost.

The third contribution to economic efficiency under a system of effluent charges arises from the flexibility given to the firm in handling its waste disposal problems. If wastes can be avoided or treated in any way for less than the cost of discharging them into the environment, the firm will be encouraged to use the most economical means; after all, a penny saved is a penny earned. With subsidies, however, a penny saved in waste treatment may mean two subsidy pennies lost.

Charges have the advantage of producing revenue for the government as the owner of previously undefined rights to environmental use. Although the rights to use many assets are distributed freely by the government, such as highways, parks, and schools, many others are sold, such as grazing and mining rights to land and rights to stored water used for irrigation. Now that water and air quality, as well as other environmental qualities, can no longer meet all the demands made upon them, the government finds itself the owner of more and more newly created assets of increasing value. It can continue to dispense these free or it can do as the owners of the other assets do and charge for the benefits received, employing the funds collected to distribute other benefits in rational and efficient ways. There are potentially large revenues from charges, particularly if environmental quality is as valuable as is supposed. Here in fact is an opportunity for the collector of revenue to be raised to a position of high esteem in public life. Thus, charging for environmental use the government would not only reduce what is currently considered pollution, but also reduce the clamor for greater purity, at the same time that greater revenues would permit a reduction of other taxes or an increase in government services in other fields.

Since charges are meant to reduce pollution, their supporters argue that the money collected should be used toward the same end. Practically all proposals for the use of charges call for the funds collected to be used to construct waste treatment facilities, support research on pollution abatement, or compensate those who are adversely affected by pollution. These proposals have a ring of common sense about them in suggesting that people hurt by pollution should be compensated. A different view is possible, however. To view the environment as an asset suggests that its owner (the government) should charge for its use and then, like owners of other assets that produce income, put the collected funds to the use providing the highest return or benefit per dollar spent. Roads, schools, hospitals, and vacations may all compete. So may pollution abatement too, but in no privileged position. It is also possible that the funds could be used most effectively on re

search for pollution abatement, but this use would also have to compete with all other uses, no inherent superiority of research on pollution being justifiable.

No doubt the idea that those who are damaged should be compensated has long had support among theoretical economists, and compensation in kind via the construction of treatment facilities has been supported by practical politicians. These actions are based on one of two concepts, each of which, however, appears weak upon examination. The most obvious concept is that those who want purity of the environment have a property right in the environment and should be compensated when they are deprived of that right. The idea that the environment belongs to the people is a popular expression of this concept, but it does not tell us what to do when some of "the people" want to use the environment to carry away their wastes in order to produce clean home sites, while others want to use the environment to carry away no waste and so produce a clean picnic site.

The second concept follows naturally. Both or all parties want to use the environment and all parties can be and usually are adversely affected by whatever level of environmental quality is likely to be achieved. Thus, when people downstream are hurt, people upstream are probably hurt too.... Under all other conditions, if a case can be made to compensate those hurt downstream, an equally strong case can be made to compensate those upstream who are also hurt.

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Without a resort to charges, regulations are likely to be the means used for allocation. Regulations are determined by political pressure and pressure seems increasingly to be determined by the decibel. If decibels are demanded to provide environmental quality, decibels will be delivered. The alternative of using dollars has much to commend it over decibels. It has been used with considerable success to allocate many goods and services, and fundamentally the environment is another good to which the same principles could apply. If this simple notion can be understood and accepted, it will be a giant step for mankind in dealing with environmental quality.

4. THE SOLID WASTE DISPOSAL ACT, AS AMENDED

[Public Law 89-272-89th Congress, S. 306, Approved October 20, 1965] AN ACT To authorize a research and development program with respect to solidwaste disposal, and for other purposes.

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TITLE II-SOLID WASTE DISPOSAL

SHORT TITLE

SEC. 201. This title (hereinafter referred to as "this Act") may be cited as the "Solid Waste Disposal Act".

FINDINGS AND PURPOSES

SEC. 202. (a) The Congress finds

(1) that the continuing technological progress and improvement in methods of manufacture, packaging, and marketing of

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consumer products has resulted in an ever-mounting increase, and in a change in the characteristics, of the mass of material discarded by the purchaser of such products;

(2) that the economic and population growth of our Nation, and the improvements in the standard of living enjoyed by our population, have required increased industrial production to meet our needs, and have made necessary the demolition of old buildings, the construction of new buildings, and the provision of highways and other avenues of transportation, which, together with related industrial, commercial, and agricultural operations, have resulted in a rising tide of scrap, discarded, and waste materials;

(3) that the continuing concentration of our population in expanding metropolitan and other urban areas has presented these communities with serious financial, management, intergovernmental, and technical problems in the disposal of solid wastes resulting from the industrial, commercial, domestic, and other activities carried on in such areas;

(4) that inefficient and improper methods of disposal of solid wastes result in scenic blights, create serious hazards to the public health, including pollution of air and water resources, accident hazards, and increase in rodent and insect vectors of disease, have an adverse effect on land values, create public nuisances, otherwise interfere with community life and development;

(5) that the failure or inability to salvage and reuse such materials economically results in the unnecessary waste and depletion of our natural resources; and

(6) that while the collection and disposal of solid wastes should continue to be primarily the function of State, regional, and local agencies, the problems of waste disposal as set forth above have become a matter national in scope and in concern and necessitate Federal action through financial and technical assistance and leadership in the development, demonstration, and application of new and improved methods and processes to reduce the amount of waste and unsalvageable materials and to provide for proper and economical solid-waste disposal practices.

(b) The purposes of this Act therefore are

(1) to promote the demonstration, construction, and application of solid waste management and resource recovery systems which preserve and enhance the quality of air, water, and land

resources;

(2) to provide technical and financial assistance to States and local governments and interstate agencies in the planning and development of resource recovery and solid waste disposal programs;

(3) to promote a national research and development program for improved management techniques, more effective organizational arrangements, and new and improved methods of collection, separation, recovery, and recycling of solid wastes, and the environmentally safe disposal of nonrecoverable residues;

(4) to provide for the promulgation of guidelines for solid waste collection, transport, separation, recovery, and disposal systems; and