An Input-Output Model of Extended Producer Responsibility

Under an extended producer responsibility (EPR) system, when a producer delivers a product to the market it must also pay a takeback fee, which is used to cover the costs of end-of-life disposal. EPR systems are currently used in Europe and beyond to manage a variety of products, including packaging and used tires. In this article we develop an input-output (IO) model that is able to assess the impacts of an EPR system, and is based on the waste IO (WIO) model. The WIO model is itself a hybrid-unit model extension of the Leontief model that is able to capture the substitution effect between recycled/recovered material/energy from waste treatment and their non-waste cognates. The resulting EPRIO model, besides the conventional direct and indirect effects of the Leontief model and the substitution effects of the WIO model, is able to capture the opportunity costs of financing the EPR system, and additionally requires the specification of an alternative waste management policy, with its own opportunity costs. The impact of an EPR policy is thus the difference between the impacts of the reference EPR and the alternative waste treament policies. The resulting model is illustrated with a simple example of a used tire management EPR system.