Upfront recycling fees can help curb flood of e-waste

Charging consumers an upfront fee to cover the eventual cost of recycling the electronics they buy also encourages people to use their devices longer and gives manufacturers more time to develop better products, according to researchers at Stanford University’s Graduate School of Business.

Such fees could provide a powerful strategy for reducing e-waste, which today comes to a staggering one million tonnes a year.

One of the causes of that problem is simply that innovation happens so quickly. As soon as a new electronic device comes onto the market, people scramble to replace their old ones, ditching mobile phones, digital cameras and laptops by the millions each year. On average, for example, Europeans buy a new mobile phone every 15 months and US consumers replace theirs every 18 months. In device-crazy Japan, the replacement cycle is even shorter: every nine months.

Tossed into the trash, these discarded devices often make their way to developing countries, where they are picked apart for the valuable metals they contain, creating dangerous pollution for people and the environment at the same time. That’s even sometimes the fate for electronics sent to recyclers by conscientious consumers.

Slowing the electronics replacement cycle could eliminate much of that waste, according to Erica Plambeck at Stanford’s Graduate School of Business and Qiong Wang of Alcatel-Lucent Bell Laboratories. They’ve found that government regulations — such as the recycling fee charged upon buying new electronics in California — can provide an effective means of achieving that goal.

“Certain forms of regulation slow the rate of new product introduction and mitigate the so-called ‘Osborne effect,’ said Plambeck. The ‘Osborne effect’ was coined after Osborne Computer, which developed the first portable computer, announced it was developing a new, improved version … causing sales of its existing product to plummet and driving the firm into bankruptcy.

The same effect continues to plague electronics makers today: the moment word leaks out that a new and better performing product is in the works, consumers become less willing to purchase products already on the shelf.

However, adding an upfront recycling fee for such products can help to reduce that effect.”When this additional cost to consumers is added at the beginning of the product life cycle, a ‘new equilibrium’ is established,” Plambeck said. “Manufacturers are in less of a rush to introduce new products. Consumers anticipate using a product for longer, and so are willing to pay more for it.”

She continued: “Because manufacturers have additional development time, they can make larger leaps in both product capabilities and quality, so the new products coming out are substantially better than the previous generation.”