A global cap on virgin plastic production could sharply increase plastic prices and weigh on household welfare, while delivering less recycling than targeted collection and recycling policies, according to a new Oxford Economics study commissioned by the International Council of Chemical Associations (ICCA).
The study found that a targeted approach to waste collection and recycling could achieve the same reduction in plastic leakage as a 5% cap on virgin plastic production, but at substantially lower economic cost and with significantly greater recycling.
Under the modeled scenarios, targeted collection and recycling policies would generate 33.6 million metric tons of additional recycling, compared with 19.9 million metric tons under the production-cap scenario — about 68% more recycled plastic.
The economic differences were also stark.
A 5% production cap was associated with an 8.5% increase in total plastic prices, combining virgin and recycled plastic prices. By contrast, targeted recycling policies were associated with a 0.2% decline in total plastic prices.
The production cap scenario also projected a $128.4 billion decline in global household welfare, compared with a $0.5 billion decline under targeted recycling policies.
Global output would fall by $20.2 billion under the production cap, while the targeted recycling scenario projected a $0.2 billion increase.
"Plastics are deeply embedded in products and supply chains, and other materials cannot readily replace them in many applications," said Alice Gambarin, one of the report's authors and associate director at Oxford Economics. "That makes demand for plastics relatively inelastic. When virgin supply is capped, demand does not simply disappear or shift to other materials. Instead, prices rise across the plastics value chain, increasing costs for businesses and consumers and lowering household welfare."
The study also found that the effects of a production cap would extend across every region included in the model. Household welfare would decline by $38.5 billion in East Asia, $37.7 billion in Western Europe, $22.1 billion in North America, $8.8 billion in Southeast Asia, $6.1 billion in the Middle East and $6.0 billion in Latin America.
Targeted recycling incentives, meanwhile, could concentrate investment where the potential to reduce mismanaged plastic waste is greatest. The study identified South Asia and East Asia as the regions with the largest absolute opportunities for improvement, with recycling increases of 20.5 million metric tons and 13.7 million metric tons, respectively.
"This study shows that environmental ambition and economic well-being do not have to be in conflict," said Marco Mensink, ICCA council secretary and director general of Cefic. "The global plastics pollution agreement is an opportunity to boost a circular economy worldwide by expanding plastic recycling and reuse, while tackling plastic waste pollution by prioritizing solid waste collection for the 2.7 billion people worldwide who still lack access."
The findings come as negotiators pursue a global agreement on plastic pollution. The study argues that such an agreement should mobilize finance, build capacity and direct resources toward waste collection and recycling measures capable of reducing plastic leakage most effectively.
