Digital Deposit Return Scheme: High-Level Economic Impact Assessment
On behalf of the Digital DRS Industry Working Group, we co-developed a solution for digital DRS, working with experts from beverage, waste and IT sectors. The digital alternative to an RVM-based DRS would see the return of drinks containers via existing kerbside collections, with the deposit claimed by scanning a unique code on the drink container with a smartphone app.
We modelled the economic impacts of an ‘all-in’ digital DRS and compared it to a traditional RVM-based DRS. Results suggest that a well-functioning digital DRS could deliver similar benefits at a much lower cost.
Objectives
Defra ran a public consultation on introducing a Deposit Return Scheme in England, Wales and Northern Ireland from March-June 2021. As part of their response, members from the Digital DRS Industry Working Group were interested in presenting a possible alternative to the traditional DRS that relies on a national network of Reverse Vending Machines (RVM).
The main objective of the research was to support discussion around deposit return schemes (DRS) and the best means of implementation, and to provide a high-level indicative analysis of costs and benefits of a digital DRS compared to a traditional DRS.
Approach
To do this, we first analysed Defra’s Impact Assessment for introducing a DRS, published in March 2021. This involved deconstructing results from the economic modelling to understand the approach taken.
To facilitate comparison between the two systems, we then conducted our own economic impact assessment (IA) using a similar approach as the Government IA, so that the findings could be as closely aligned as possible given the available information.
We then engaged relevant stakeholders from the packaging, waste, and IT industries to identify the likely costs of different elements of a digital DRS to fill in the model.
Outcomes
The economic impact assessment found potentially significant cost savings by using digital solutions to support a DRS. This is largely due to the large reduction in the capital investment required for RVMs when compared to a traditional DRS, as a digital DRS uses a smaller network of these return points and cheaper/simpler RVM units.
The research was picked up by various media outlets, suggesting its timeliness and relevance.
- Digital DRS could achieve huge savings | Resource Magazine
- Digital DRS could offer ‘significant’ savings | Let’s Recycle
- Report: ‘Digital’ DRS could achieve policy objectives at ‘significantly lower cost’ | Circular Online
- Recyclers call on Government to ‘go digital’ for DRS | MRW
Off the back of this economic impact assessment, the Digital DRS Industry Working Group, Welsh Government and WRAP Cymru have organised into a Steering Group that will oversee further research to investigate the feasibility of a digital DRS in more detail, as a viable alternative to RVM-based systems.
Resource Futures has been commissioned to undertake this feasibility study and is currently working with the Steering Group and other relevant stakeholders to gain detailed understanding of how a digital DRS might work in practice.
This research is supported by real-world trials that have been undertaken by technology providers to test the public acceptability of an app-based deposit return scheme.
