FULLTEXT01

EXAMENSARBETE INOM INDUSTRIELL EKONOMI,
AVANCERAD NIVÅ, 30 HP
STOCKHOLM, SVERIGE 2017
From Plastic to Paper

Mapping the real cost of plastics
NILS LINDSTRAND
KARL THUNELL
KTH
SKOLAN FÖR INDUSTRIELL TEKNIK OCH MANAGEMENT
www.kth.se
From Plastic to Paper
Mapping the real cost of plastics
by
Nils Lindstrand
Karl Thunell
Master of Science Thesis INDEK 2017:51

KTH Industrial Engineering and Management
Industrial Management
SE-100 44 STOCKHOLM
Från plast till papper
Plastens egentliga kostnad
Nils Lindstrand
Karl Thunell
Examensarbete INDEK 2017:51

KTH Industriell teknik och management
Industriell ekonomi och organisation
SE-100 44 STOCKHOLM
Abstract
Due to rising concerns of the litter resulting from linear production models, the circular pro-
duction model has gained increasingly widespread attention. The circular value chain promotes
better resource utilization within closed system boundaries and aims to minimize the use of vir-
gin feedstocks. This, in turn, could help to lower the impact of hidden costs, i.e. externalities,
caused when applying linear production models.
The packaging industry has had a strong growth over the last decades and is expected to
increase even further over the coming decades. The most common type of packaging material
is plastic, followed by paper. However, the purchasing prices for each material does not reflect
the full impact imposed on the global economy, when incorporating costs from end-of-life.
Therefore, a cost-comparison between plastic and paper bags will be made by quantitatively
investigating the costs that the materials incur in the following areas, when not being disposed
correctly: Beach cleanup, City cleanup, Fishing Industry, and CO2 impact. Moreover, the
following aspects have been identified as being affected, but due to difficulties in quantifying
the measures, have only been assessed qualitatively: Tourism industry, Agriculture, Wildlife,
and Health concerns.
The results show that in a high cost scenario, paper bags outperforms their plastic equivalents
in the quantitative categories. However, when including the qualitative aspects, the results
indicates that paper bags outperforms plastic alternatives in low, average, and high cost sce-
narios. Furthermore, if the packaging industry were to improve infrastructure for after-use,
strengthen recycling incentives and reduce plastic material use, current best case scenarios
predicts that a reduction of plastic leakage by 45 % by 2025 would only result in a steady-
state. Thus, the conclusion is that a transition towards truly biodegradable materials, such
as paper, is crucial in order to reverse the deterioration of vital ecosystems and reduce the
negative economic impacts.
Keywords: Circular Economy, Externalities, Life Cycle Assessment, Litter, Plastic packaging,
Paper packaging
i
Sammanfattning
I och med ökad oro för avfall från linjära produktionsmodeller, så har den cirkulära produktion-
smodellen fått alltmer uppmärksamhet. Den cirkulära värdekedjan förespråkar bättre resur-
sanvändning inom stängda systemgränser och minimerar användandet av jungfruliga råvaror.
Det i sin tur skulle innebära en minskning av påverkan från dolda kostnader, m.a.o. exter-
naliteter, som uppstår i linjära produktionsmodeller.
Förpackningsindustrin har haft en stark tillväxt de senaste decennierna och förväntas att öka
ytterligare över de kommande åren. Det vanligaste förpackningsmaterialet är plast, följt av
pappersprodukter. Dock speglar inte inköpspriserna för ovan nämnda material den totala kost-
naden som de orsakar den globala ekonomin, genom att analysera hela livscykeln. Således kom-
mer en kostnadsjämförelse undersökas genom att kvantifiera kostnaderna som materialen or-
sakar inom följande områden, då de inte hanteras korrekt: Stranduppstädning, Stadsrengöring,
Fiskeindustripåverkan och CO2-påverkan. Dessutom har ytterligare aspekter identifierats och
kommer att analyseras kvalitativt, då dessa varit svårberäkneliga, nämligen: Turistindustrin,
jordbruksindustrin, djurliv och människohälsa.
Resultaten påvisar att i ett högkostnadsscenario så överträffar papperspåsar motsvarande
plastpåsar i de kvantitativa kategorierna. Dock, vid en inkludering av de kvalitativa aspek-
terna indikerar resultatet att papperspåsar är billigare i låg-, medel- och högkostnadsscenari-
erna. Dessutom, om förpackningsindustrin skulle införa förbättringsåtgärder för infrastruktur,
öka incitamenten för återvinning och minska plastanvändningen förutspår man i bästa fall
att avfallsutsläppen kan minska med 45 % till 2025, som enbart innebär att man uppnår ett
stationärt tillstånd (”steady state”). Därför dras slutsatsen att en övergång mot verkligt biol-
ogiskt nedbrytbara material, såsom papp, är nödvändigt för att minska miljöförstöringen och
reducera de negativa ekonomiska konsekvenserna.
Nyckelord: Cirkulär ekonomi, Externaliteter, Livscykelanalys, Avfall, plastförpackningar,
pappersförpackningar
ii
Foreword
This master thesis was conducted during the spring of 2017 at the Royal Institute of Technology
(KTH), Stockholm, Sweden, at the department of Industrial Engineering and Management
within the unit of Sustainability and Industrial Dynamics (SID).
Acknowledgements
We would like to express our gratitude to our supervisor Jon Haag at BillerudKorsnäs for
the valuable support and advice throughout the whole project. His experience and insights
provided us with many useful ideas. Furthermore, the constructive criticism received at the
focus group seminars led by Cali Nuur helped us to refine the thesis. Finally, we would like to
thank our supervisor from KTH, Michael Novotny, who gave us guidance and feedback in how
to form the academic thesis.
iii
Abbreviations
APEC - Asia-Pacific Economic Cooperation
BK - BillerudKorsnäs
CE - Circular Economy
COP - Conference of Parties
CO2 - Carbon Dioxide
tCO2e - ton Carbon Dioxide equivalent
EIA - Energy Information Administration
ETR - Environmental Tax Reform
ETS - Emission Trading System
GDP - Gross Domestic Product
GHG - Greenhouse Gas
GWP - Global Warming Potential
HDPE - High Density Polyethylene
IVL - Institutet för vatten- och luftvårdsforskning (Swedish Environmental Research Insti-
tute)
LCA - Life Cycle Assessment
LDPE - Low Density Polyethylene
MRQ - Main Research Question
OECD - Organisation for Economic Co-operation and Development
PPP - Purchasing Power Parity
PSS - Product Service Systems
SDG - Sustainable Development Goals
UNEP - United Nations Environment Programme
USD - United States Dollar
VAT - Value Added Tax
iv
Contents
1 Introduction 1
1.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Problematization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Aim & Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Research Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Delimitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5.1 Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5.2 Data Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Industry Overview 5
2.1 The Packaging Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Plastic Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.1 Biobased- and Biodegradable Plastics . . . . . . . . . . . . . . . . . . . 7
2.3 Fibre-based Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3 Methodology 9
3.1 Research Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.1 Pre-study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.2 Literature Review and Quantitative Study . . . . . . . . . . . . . . . . . 10
3.1.3 Qualitative Methods - Interviews . . . . . . . . . . . . . . . . . . . . . . 10
3.1.4 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Reliability and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Generalizability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4 Literature Review 14
4.1 The Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1.1 The Circular Economy in Business . . . . . . . . . . . . . . . . . . . . . 15
4.2 Externalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Life Cycle Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Carbon Pricing Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5 Mapping the Externalities 18

5.1 Case Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Identifying the Externalities Using United Nations’ Sustainable Development
Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Measuring Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6 Assessing the Externalities 21

6.1 The Externalities from Paper and Plastic Bags . . . . . . . . . . . . . . . . . . 21
6.2 CO2 Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Marine Debris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Beach Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 City Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Fishing Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7 Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.8 Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.9 Wildlife . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.10 Health Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7 Results - Cost of Externalities 34

7.1 Cost of CO2 Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1.1 Cost of CO2 Impact Indonesia . . . . . . . . . . . . . . . . . . . . . . . 34
v
7.1.2 Cost of CO2-impact U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Impact on Fishing Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2.1 Fishing Industry Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2.2 Fishing Industry U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.3 City Cleanup Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.3.1 City Cleanup Jakarta . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.3.2 City Cleanup London . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.4 Beach Cleanup Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.4.1 Beach Cleanup Cost Indonesia . . . . . . . . . . . . . . . . . . . . . . . 40
7.4.2 Beach Cleanup Cost U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.5 Annual Direct Cost Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.6 Cost Per Bag Comparison - Indonesia . . . . . . . . . . . . . . . . . . . . . . . 44
7.7 Cost Per Bag Comparison - United Kingdom . . . . . . . . . . . . . . . . . . . 44
8 Analysis - Internalization and Comparison 46

8.1 Quantified Externalities - Direct Costs . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 Including Other Externalitites - Indirect Costs . . . . . . . . . . . . . . . . . . 47
9 Discussion 50
9.1 The Packaging Industry’s Circumstances and Future Prospects . . . . . . . . . 50
9.2 The Circular Economy Perspective . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.2.1 Circular Model for Policymakers . . . . . . . . . . . . . . . . . . . . . . 52
10 Conclusion 53
10.1 Answering the Research Questions . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.2 Academic Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.3 Industry Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.4 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.5 Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.5.1 Externalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.5.2 The Circular Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11 References 57
Appendices 62
Appendix A - Gantt-chart 62
Appendix B - Interview Scheme 63
Appendix C - Assumptions and Estimations for Quantitative Study 64
vi
List of Figures
1 Packaging material types, distribution and end markets . . . . . . . . . . . . . 5
2 Project Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3 Linear vs Circular Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4 United Nations’ sustainability goals . . . . . . . . . . . . . . . . . . . . . . . . . 19
5 Value chain and negative externalities caused by paper and plastic packaging
products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6 Grams CO2-equivalents per bag type throughout the value chain . . . . . . . . 22
7 Source of marine litter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8 Where Plastics End up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9 Concentration of plastics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10 Most frequent items collected during the International Coastal Cleanup Day in
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11 Share of Cleanup Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12 Plastic ingestion and bioaccumulation along the food chain . . . . . . . . . . . 32
13 Cost of CO2 per bag in Indonesia according different pricing models . . . . . . 34
14 Cost of CO2 per bag in the U.K. according to different pricing models . . . . . 35
15 Annual cost of damages incurred by plastic bags to the fishing industry in Indonesia 36
16 Cost per plastic bag sold in Indonesia to compensate fishing industry damages 36
17 Annual cost of damages incurred by plastic bags to the fishing industry in U.K. 37
18 Cost per plastic bag sold in U.K. to compensate fishing industry damages . . . 37
19 City cleanup cost of plastic and paper bags in Jakarta . . . . . . . . . . . . . . 38
20 City cleanup cost per sold bag Indonesia . . . . . . . . . . . . . . . . . . . . . . 38
21 City cleanup cost of plastic and paper bags in London . . . . . . . . . . . . . . 39
22 City cleanup cost per sold bag United Kingdom . . . . . . . . . . . . . . . . . . 39
23 Annual beach cleanup cost for plastic bags in Indonesia . . . . . . . . . . . . . 41
24 Beach cleanup cost per plastic bag sold in Indonesia . . . . . . . . . . . . . . . 41
25 Annual beach cleanup cost for plastic bags in United Kingdom . . . . . . . . . 42
26 Beach cleanup cost per plastic bag sold in United Kingdom . . . . . . . . . . . 43
27 Aggregated societal cost per plastic and paper bag in Indonesia . . . . . . . . . 44
28 Aggregated societal cost per plastic and paper bag in United Kingdom . . . . . 45
29 Aggregated cost per plastic and paper bag in Indonesia, including purchasing
price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
30 Aggregated cost per plastic and paper bag in United Kingdom, including pur-
chasing price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
31 Estimated societal cost for plastic and paper bags . . . . . . . . . . . . . . . . . 48
32 Estimated full cost for plastic and paper bags . . . . . . . . . . . . . . . . . . . 49
33 Gantt Chart of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
List of Tables
1 Classes of Plastics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 Most common type of plastics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 Results from the International Coastal Cleanup Day in 2007 in the APEC region
(McIlgorm et al. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4 Results from the Great British Beach Clean in 2016 . . . . . . . . . . . . . . . 42
5 Total annual cost and per bag cost incurred by plastic bags . . . . . . . . . . . 43
6 Total cost per bag and material type including direct costs . . . . . . . . . . . 53
vii
1 Introduction
The introductory chapter provides the reader with an overview of the report and includes back-
ground and problem formulation. This will then lead to the purpose and the research questions
that are to be investigated and finally the delimitations and expected contribution of the the-
sis.
1.1 Background
Plastic is arguably one of the most useful and versatile materials ever invented, and the modern
society would not be possible without it. Plastics are today used in everything from spaceships
to clothing (Sustainable Packaging Coalition, 2009). The fastest growing segments of plastics is
packaging, which is almost exclusively single-use plastic packaging. With a rising middle class
in developing countries, the consumption of consumer goods will increase and the packaging
industry will naturally grow with it (Boyce and Palmer, 2015). Packaging is utilized to prolong
products durability as well as to preserve them, which minimizes wasted resources. Most
packaging material such as glass, paper and carton board are organic materials, which means
that they also decompose organically. Plastics, however, are manufactured from fossil fuels and
do not decompose organically and also have a significantly higher impact on the environment
(Dahlgren et al., 2016). Since they do not decompose organically, they persist for a longer
period of time. To put this in perspective, a plastic bottle can survive for roughly 400 years
(Surfers Against Sewage, 2014; World Economic Forum et al., 2016) whereas a paper bag is
fully dissolved within six months (Science Learning Hub, 2008; Haag, 2017).
Poor recycling systems and collection of packaging materials has today meant an abundance
of litter and linear production models have unfortunately, depending on the material used in
the packaging product, resulted in an environmental disaster of gigantic proportions (Avio et
al., 2016). With a 95 % first-use cycle of plastic packaging material globally, an estimated $
80-120 billion is lost to the global economy annually. Because of the abysmal recycle rate of
plastic, the after-use externalities associated with littering reduces the productivity of vital
systems (e.g. oceans and urban infrastructure) and is conservatively estimated to be $ 40
billion annually, thus exceeding the packaging industry’s profits. The amount of plastic waste
in oceans is roughly estimated to be somewhere between 100-200 millions of tons and if the
trend continues, plastic will outweigh fish by 2050 (World Economic Forum et al., 2016).
The ‘take, make, dispose’ economic models are currently being challenged by what is known as
the Circular Economy (CE). CE is an economic model that is restorative and regenerative by
design and seeks to ultimately decouple global economic development. Having been adopted
by the European Union and companies such as H&M, Dell and Energizer, the CE approach has
an opportunity to become the new norm for companies (Ellen MacArthur Foundation, 2015).
CE is attractive as the concept of resource productivity enables a new way of analyzing the
full system cost and the value associated with any product. Resource inefficiencies are most
apparent within companies in the form of incomplete material utilization and poor process
controls, which result in unnecessary waste, defects, and stored materials. By focusing on
these, companies have the opportunity to not only reduce costs but also to become more
innovative. After all, pollution is, in its essence, a representation of a missed opportunity and
resources being used incompletely and inefficiently (Porter and van der Linde, 1995).
1
1.2 Problematization
Over the past six decades, contamination and pollution of the oceans have become a growing
problem. Materials that are non-biodegradable, such as plastics, cause a wide range of problems
(Avio et al., 2016). The more recognized issues of ocean pollution are associated with the
impact on marine wildlife, aesthetic issues and public perception (Gregory, 2009). There
are however additional issues associated with marine litter, such as harm to ships, fisheries,
agriculture, tourism as well as human health concerns (Gregory, 2009; Mouat et al., 2010).
These areas have either not been quantified properly, or have had a single-measure focus that
makes the holistic overview of the total cost of packaging materials, including after-use negative
externalities, difficult to assess (World Economic Forum et al., 2016).
This poses significant challenges to alternative packaging materials, which are traditionally
more expensive for businesses but do not have the same socio-economic costs. There are plenty
of proponents of plastics who argue that it is a cheaper and more sustainable material than
paper, despite being manufactured from oil or natural gas and having significant environmental
and health effects (Stockwell and Smith, 2005; Muthu et al., 2011). Paper, although not always
having the equivalent qualities of plastics, is a competitive alternative since it derives from
renewable feedstocks and decomposes naturally, hence not inducing the same costs as plastics
(Haag, 2017).
1.3 Aim & Purpose
The purpose of this study is to conduct a cost-comparison of plastic bags with fibre-based
equivalents by including end-of-life aspects. The comparison will consist of a quantitative
segment as well as a qualitative segment of factors that are not easily quantified, with the aim
of creating an accumulated cost-impact evaluation. The evaluation will be applied on a less
developed country, Indonesia, and a developed country, United Kingdom.
1.4 Research Questions
Given the outline of previous segments and with regard to the purpose of the study, the main
area of investigation of the study will encompass the following question:
MRQ: What insights can the packaging industry provide into the prerequisites of the success
of circular business models?
In order to answer this question, the following sub-questions have to be assessed:
RQ1: How does the accumulated costs of plastic and paper bags compare in a developed
(United Kingdom) and a less developed country (Indonesia)?
RQ2: What does an inclusion of end-of-life aspects for plastic and paper bags reveal about
the societal costs and the most cost-effective choice of material?
2
1.5 Delimitations
The convergence of the project has been made to encompass a size that is manageable and
approachable given the time frame of the project. The delimitations set up encompasses the
data collection and data analysis.
1.5.1 Data Collection
Since the impact, damage and direct connection of the externalities on this macro-level scale is
difficult to determine, there are few reports that have made an attempt to put numbers to the
problems. The reports that have quantified the externalities are extensively referred to, both
in organizational reports as well as academic ones, thus increasing the trustworthiness of using
these in this thesis. It should be noted that it will not be possible to account for all externalities
and costs caused by the packaging industry. As described by Nguyen et al. (2016), mapping the
externalities and accounting for them has in itself a conflict between keeping uncertainty low
and creating a comprehensive model. This is further complicated by the subjective preference
of value (Inaba, 2013). Because of these issues the authors have chosen to use the numbers
presented in the reports and adjusted these where possible and prudent.
Since there is a wide variety of plastic materials and areas of implementation, this report will
specifically focus on plastic carrying bags and paper bags that have the same attributes and
are competitive substitutes. However, when calculating the externalities, such a limitation to
materials are close to impossible to determine precisely, since materials found in ecosystems
could come from any moment in time due to the longevity of plastic materials. Therefore, to
keep the analysis unbiased, low, average, and high cost scenarios will be made for both materi-
als. Another delimitation is that the comparison between plastic and fibre-based materials will
not encompass bio-based or biodegradable plastics, since these are still relatively new on the
market, thus representing a smaller proportion of the total amount of plastics leaked (World
Economic Forum et al., 2016; Haag, 2017). This is also further complicated by the fact that
available data is limited.
The initial cost, i.e. purchasing price for retailers, for plastic bags are set at ce4 and an equiv-
alent performing paper bag costs ce8 (Haag, 2017). The prices do not account for purchasing
power parity or varying prices in different regions and is thus assumed the same regardless of
region.
The evaluation and comparison of plastic and fibre-based products’ costs will then be assessed
for two case countries to illustrate the difference in exposure to the plastic problem, as well
as regional abilities to deal with it. This will also highlight the different economic possibilities
to rethink packaging materials in the chosen regions. The comparison is delimited to the
two countries of U.K and Indonesia and will provide an overview of how a developed region
might differ from a less developed counterpart. The case countries have been chosen partially
on data availability, and partially since both are island nations in two varying parts of the
world, meaning that the conditions are different in regards to economic situation, geographical
positions, and recycling infrastructure and habits.
1.5.2 Data Restrictions
The study is delimited to one product (carrying bags) and two types of materials (fibre-based
and plastic materials), it raises concerns of when and how to distinguish costs that are directly
associated to these two products alone. The reviewed reports revealed that quantifying certain
externalities tend to bunt all plastic materials into one category and all paper or fibre-based
ones into another category, making it difficult to extract and pinpoint numbers to one product
or one material alone. The precision of the input data in this report is therefore limited,
partially due to the lack of research on the macro-level externalities caused by the packaging
3
industry and partially due to a mixture of different annual reports, estimates and assumptions
made. Since the research is dynamic and ever-changing it is hard to keep a congruent and up-
to-date data collection methodology, so it is a trade-off between the extent of information and
data collectivity v.s. precise and up-to-date data availability. For more in depth understanding
of assumptions made, we refer to Appendix C.
Furthermore, in order to make an impartial and reasonable comparison, the same approach
and measuring tools are used in the comparative analysis. In order to strengthen the validity
of the outcome, various cost scenarios based on different estimations, will form a span where
the cost of externalities will lie within. The chosen aspects for carrying out the value chains’
environmental impacts have been decided to delimit only to carbon dioxide equivalents, since
this is the only measure, as for now, that has a price tag to it, which for example sulfur and
nitrogen do not have. Additionally, the environmental impacts that are highlighted from the
paper products will be based solely on the products that BillerudKorsnäs produces in Sweden,
thus not accounting for other energy mixes. It has not been possible to retrieve raw input data
from the LCA-studies quantifying the value chains for the packaging materials that have been
used at face-value. For the chosen case countries, the transportation of material distances differ
slightly from what the LCA-studies have accounted for. However, the CO2-pollution caused
by transportation accounts for less than 5 % of the total value chain’s CO2-pollution, hence
the impact from this variable will not affect the outcome vastly.
As for the negative externalities linked to the packaging industry, it has been chosen to delimit
it to areas that are recurring in reports reviewed. The most common externalities have been
listed as the following in literature found: Cleanup cost of beaches or coastlines, Cleanup cost
for cities, Fishing industry, Agriculture, Wildlife, Tourism and Human health (Li et al., 2016;
McIlgorm et al., 2008; Mouat et al., 2010). Wildlife and human health concerns are two areas
where efforts has been raised as to how littering affects them, however quantifying them have
not yet been explored fully, thus these areas will only be covered qualitatively. Agriculture has
had a case study on the Shetland Islands based on 11 farmers survey answers as to how littering
affects them (Mouat et al. 2010), however the data material is considered to be to vague in
order to make a thorough assessment on the chosen case countries for this study, meaning it will
only be evaluated qualitatively. Tourism has had reports and surveys listing several negative
externalities, however it has been decided that littering and pollution affects local communities
and municipalities, thus making a quantitative assessment biased, since tourists will choose an
alternative site, meaning that one community loses (costs) due to negative externalities from
the packaging industry whilst another community gains (profit) visitors that goes to their site
instead. Finally, cleanup cost and the fishing industry’s costs are areas where it is possible
to find common and clear patterns as to how the packaging industry affects them, thus these
areas will be quantified.
4
2 Industry Overview
In this chapter an overview of the packaging industry is presented, including an introduction

to the two most common types of packaging materials, namely plastic and paper.
2.1 The Packaging Industry
Packaging serves many purposes. Some of its benefits are physical protection of the product,
prolonging the lifespan, marketing and branding, convenience, and portion control. Depending
on the intended usage area, many of these factors may decide the packaging design and ensure
it meets the requirements of modern packaging (Sustainable Packaging Coalition, 2009).
The global packaging market is estimated, as of 2012, to be valued at $ 500 billion where
the consumer packaging market stands for $ 400 billion and industrial end-markets makes up
the remaining $ 100 billion. In consumer packaging, plastic packaging is the most common
material used and is expected to continue its strong growth. From a yearly production of
approximately 300 million tons in 2014, plastic packaging production is projected to reach
about 1,100 million tons by 2050 (World Economic Forum et al., 2016). This is mainly due to
an increasing middle class in the large countries BRIC: Brazil, Russia, India and China - which
will have both increased consumption of consumer goods and a higher demand on packaging
products in general (Neil-Boss and Brooks, 2013). The packaging sector consists of five main
types of packaging, where two of them constitutes the majority of the shares (N.B. statistics
from 2012): Paper packaging (including bags and carton boards) with a 34 % market share,
the fastest growing segment which is rigid plastics (pots, jars, bottles, etc.) with 27 % , glass
11 %, flexible plastics 10 %, and beverage cans 6 % (Neil-Boss and Brooks, 2013). The charts
in Figure 1 below illustrates the packaging industry’s distribution, end market and packaging
types.
Figure 1: Packaging material types, distribution and end markets

(Neil-Boss and Brooks, 2013)
In the report “Future of Global Packaging to 2020” by Boyce and Palmer (2015), it is stated
that rigid plastics and flexible packaging products are the segments that will increase their
market share whilst the rest of the materials will account for a relatively smaller share. The
flexible packaging materials includes plastics, papers and foils where bags, sacks and pouches
are the main constituents and where flexible plastics stands for 70.5 % of the total flexible
packaging consumption (Boyce and Palmer, 2015). The differences in recycling rates between
packaging materials are large. Only a staggering 14 % of all plastic packaging is collected for
recycling, and when accounting for additional value losses in sorting and reprocessing, only
5 % of material value is retained for subsequent use. To put this in perspective, the global
recycling rate for paper is 58 %. It should be noted that the recycling rates varies a lot in
different parts of the world (World Economic Forum et al., 2016).
5
2.2 Plastic Packaging
Plastics exists in many forms, but can be categorized into four major types with respect
to biodegradability and the natural resource used in the manufacturing process. The four
types are: conventional plastics, bio-based plastics, biodegradable plastics and biodegradable
bio-based plastics. As displayed in table 1, the four different types are outlined based on
the natural resource used and whether or not the final materials are biodegradable, more on
biodegradability under section 2.2.1 (Gómez and Michel, 2013).
Table 1: Classes of Plastics

(adopted from Gómez and Michel, 2013)
The feedstock of conventional plastics is based on crude oil or methane gas with possible
additives. In the process of making plastics, the crude oil or methane gas is refined through
different steps by using chemical processes to create the resins of plastic, ethylene, propylene
and butylene. These molecules are then combined, depending on the desired characteristics
of the plastics and further handled to eventually create a wide arrange of plastic materials.
(Plastics Europe, 2017).
Another classification can be made based on the composition of the plastic material. The
most commonly used polymers (plastics) are high-density polyethylene (HDPE), low-density
polyethylene (LDPE), polyvinyl chloride (PVC), polystyrene (PS), polypropylene (PP) and
polyethylene terephthalate (PET) which are displayed in table 2 below. When accumulating
these different types, they account for approximately 90 % of the total global plastic production
(Li et al., 2016). For the value chain analysis in this thesis, or life cycle assessment excluding
end-of-life, the LDPE bags will be assessed. The difference between HDPE and LDPE is
the pressure in the manufacturing process but the emissions during this phase are practically
equal. Another difference is that the HDPE bags are smaller and therefore carry less weight.
HDPE plastic bags can be thought of as the bags used in the fruit and vegetable department
in grocery stores whilst the LDPE plastic bags are the larger ones, bought when leaving the
store (Stripple, 2017).
6
Table 2: Most common type of plastics
(adopted from Li et al., 2016)
Plastic packaging holds many benefits as a material in comparison with other packaging so-
lutions because of its lightweight and durability, which protects the product and makes it
last longer, and also decreases GHG emissions in transportation. (World Economic Forum et
al., 2016). Plastic packaging is almost exclusively used for what is referred to as single-use-
packaging, which means that the lifetime of a plastic packaging product intentional use exists
between packaging for distribution and unwrapping at the point of consumption (NewInnoNet,
2015). Its success as a packaging material has led it to be used in everything from carrier bags
to candy wrappers and through continuously finding new uses in packaging, plastic packaging
volumes are expected to continue their strong growth. The World Economic Forum et al.
(2016) predicts the plastic output to increase twofold by 2030 and fourfold by 2050 compared
to today’s levels.
2.2.1 Biobased- and Biodegradable Plastics
Due to the environmental pollution that plastic materials causes there have been, during the
last couple of years, several initiatives to introduce and implement additives in plastics. The
aim with this is to increase the biodegradability and moreover to produce bio-based and nat-
ural fiber composites. This, in combination with the fact that plastics are derived from non-
renewable feedstocks and have a high persistence during organic recycling, has fastened the
development of finding plastic materials that not only can match the performance of conven-
tional plastics, but that also have reasonable prices and are produced from renewable feed-
stocks. Finally, the “new” plastics could hopefully undergo a quicker biodegradation with the
aim of not leaving toxic residues (Gómez and Michel, 2013).
Even though biodegradable bio-based plastics are meant to decrease the environmental impact
and emit less GHG, complete life-cycle analyses are lacking and the extent of biodegradability is
questioned, making it uncertain whether or not biodegradable plastic really is a valid solution.
7
The same goes for conventional plastic products amended with additives with the purpose of
enhancing the biodegradability. As for now, there are no research as to whether the materials
truly degrade. Furthermore, there are few studies on the performance, e.g. how fast the
degradation occurs when undergoing processes such as composting, anaerobic digestion or in
natural settings due to plastics longevity. In the most recent study, conducted by Gómez and
Michel (2013), experiments were made, testing the biodegradability of bio-based plastics and
plastics amended with additives with the intention of improving the degradation. It was proven
to not increase the process of breaking plastics down to a great extent, thus still having a long
after-use life-expectancy. The bio-based plastics however, showed to break down faster but,
unfortunately, for some it was shown that they generated methane during anaerobic incubation.
Methane gas is particularly devastating as the GHG has 21 times the warming potential of
CO2, meaning that it can be of more harm than the conventional plastic materials that do
not decompose and release methane (Gómez and Michel, 2013). Bio-based plastics appear to
be more environmentally friendly than their petroleum-based counterparts, but as shown by
Gómez and Michel (2013), this might not be the case with the release of methane. Furthermore,
it has been shown that the bio-based plastics being used commercially in 2010 had genetically
modified organisms for feedstock and generate several toxic chemicals as byproducts in the
manufacturing process (Álvarez-Chávez et al., 2011).
2.3 Fibre-based Packaging
The other material which will be compared to plastics is fiber based packaging. While having
a smaller market share than plastics, Boyce and Palmer (2015) predicts that flexible paper
packaging materials (i.e. fibre-based packaging) will experience an annual growth rate of 2.0
% between 2015-2020. Whilst still growing, it is below the expected rate at which packaging
materials will increase (3.5 %) and also far below flexible plastics’ expected growth of 3.8 %
during the same period.
Fiber based packaging, naturally also contributes to pollution, which differ greatly depending
on where pulp and paper products are manufactured. Steam and electricity are the typical
energy forms used for pulp and paperboard production (Sustainable Packaging Coalition, 2009).
Because the process of producing pulp and paper creates residues which can be used to generate
electricity, the pulp and paper companies heavily rely on bio-fuels for electricity, a sustainable
and carbon neutral energy source. For example, as of 2015, the Swedish pulp and paper
company BillerudKorsnäs had 97.6 % of the energy consumption during production processes
in biofuels and the remainder, 2.4 %, was fossil fuels (Essén, 2016).
The main environmental issues with fibre-based packaging products in general are: The use
of additives and coating that may reduce the recyclability of corrugated materials, the wa-
ter intensity used in virgin processes (primary production) and potential for organic effluent
discharge into waterways, thus causing contamination and pollution. Furthermore, paper-
board production in some Asian countries are utilizing unsustainable management practices,
contributing to deforestation, soil erosion and degradation, habitat destruction, loss of biodi-
versity, and loss of high value forests and old growth forests (Sustainable Packaging Coalition,
2009). However, the methods for virgin fibre production are regulated and does not pose the
same type of threats experienced in Asia. Overall there is an abysmal proportion of the pulp
and paper industry which contributes to deforestation (Haag, 2017).
8
3 Methodology
This part of the study will explain what tools and approaches that are to be used in order to
reach the aim and answer the research questions proposed in the introductory chapter.
3.1 Research Design
The general methodology of this study will follow the 4-phase model, an iterative working
method adding sections throughout the whole process (Blomkvist and Hallin, 2015). Elements
that are relevant for this particular type of study, such as empirical approaches and interview
methodologies, will be assessed and applied in order to form a clear structure and foundation
for the study as a whole.
Since the purpose of the study is to map and quantify the cost of two plastic and fibre-
based materials, and there have not been any extensive attempts to accumulate the costs of
externalities directly linked to the chosen products, it is plausible to assume that the disposition
of the work will follow an inductive approach. This is because the theories will help to develop
a better understanding of the findings rather than being a driver of conducting the study. The
inductive approach has its foundation in observations that will be analyzed and eventually
transform into a theoretical concept based on the conclusions drawn from the observations
(Collis and Hussey, 2003). In Figure 2 below, a scheme of the working process in the thesis is
presented.
Figure 2: Project Process
3.1.1 Pre-study
The first part of the study is a pre-study where the key issues are formulated and clarified.
When a preliminary literature review has been made, meetings with representatives from one of
the industry leaders, BillerudKornsäs, have been made. The first round of interviews was with
the following persons in order to conduct the pre-study: Jon Haag, Director Consumer Insights;
Louise Wohrne, Sustainability Developer (both BillerudKorsnäs) followed by a tutorial meeting
9
with the supervisors from Kungliga Tekniska Högskolan in order to outline what theories and
concepts that are of relevance, setting the foundation of the empirical study and literature
review.
3.1.2 Literature Review and Quantitative Study
When the initial phase has been finalized, the next part is a literature review in combination
with a simultaneous empirical study. The literature and theoretical concepts that are to be
reviewed have been chosen accordingly to the purpose and research questions, hence keeping
vaguely related theories out of context. The examined literature will be retrieved from Google
Scholar and KTH B Primo (including Web of Science and Scopus). Keywords used for the
literature review has been: life cycle assessment, value chain analysis, circular economy, exter-
nalities, environmental economics, economic instruments and carbon pricing. Furthermore, for
the packaging industry and the explorative study the following keywords have been utilized:
plastic waste, plastic litter, microplastics, biodegradable plastics, paper packaging, fibre-based
packaging, marine debris and ocean pollution. Lastly, combinations of keywords both from
the literature review and the explorative study has been made together with a limitation to
environmental sciences and engineering in order to pinpoint the intended research area and
narrow down the number of sources collected to a feasible number. Since the subject of plastic
pollution is highly debated, dynamic and rapidly changing, it has been decided not to collect
data more than ten years of age in order to keep the relevance and data up to date. The
problems associated to the packaging industry on the other hand have been present over a
larger time period, hence literature that has conducted qualitative studies older that ten years
are reviewed, but not necessarily included in the thesis.
It should be stated that this area of research is relatively new and difficult to quantify. Most
of the available material comes from pioneer researchers or organizations that have an interest
in the development of this field of science. Since it is an exploratory phase to find the costs
of externalities caused by the packaging industry, case studies are the appropriate tool for
this phase of the investigation. The strengths displayed by a case study is that it has an
ability to deal with a variety of evidence - documents, artifacts, interviews and observations -
cannot be fully used in this report due to lack of information and direct observations not being
made (Yin, 2009). Another complicating dimension is that exponential leakage of plastics
is causing more and more problems, putting pressure on the research material to keep up
with the continuous changes and development within the field. Therefore, reports from public
organizations will be included, since these are the ones that have made extensive efforts in order
to quantify certain externalities. These elements have been difficult to attempt to quantify from
an academic standpoint, due to financial power, time perspective and effort for initial studies to
be developed, and the degree of uncertainty in reliability and validity. The academic literature
will help to confirm certain elements found and highlighted by organizational reports and keep
information less subjective and biased, however the macro-level quantifications of i.e. leakage
and waste are mostly estimates that are close to impossible to determine exactly. This is due
to the dynamic nature and size of the research area.
3.1.3 Qualitative Methods - Interviews
Interviews have been conducted with experts from academia, that have applicable knowledge
from a scientific perspective, and industry experts. The intention with conducting the inter-
views have been to gain insights on where problems lie in data collection and analysis regarding
the packaging industry’s externalities. It has also helped to refine the problem formulation since
critical aspects have been assessed during the interviews. The meetings with the supervisors
and the conducted interviews have mainly been unstructured, meaning that there is an over-
arching topic and just a few questions have been prepared beforehand. This has been the
chosen interview methodology since it has been desired to gain a deeper understanding on the
10
views on the packaging industry’s externalities without locking the interviewees in to a specific
mindset but also to keep an unbiased point of view (Blomkvist and Hallin, 2015). Even though
it is suggested to record the interviews, in order to afterwards analyze answers given since the
range of topics and questions are flowing during unstructured interviews, it has not been the
case for this study (Collis and Hussey, 2003).
Apart from the information retrieved during the tutorial meetings, listed in Appendix B, three
interviews have been conducted.
Two contacts have been through e-mail communication where the thesis has been presented
followed by questions related to the specific area of investigation that the person has conducted.
Furthermore, questions of certain numbers related to e.g. plastic consumption, leakage have
been posed in order to confirm what has been read. It has been a mean of validation for the
input of data for the quantitative model used in order to calculate the results. Lastly, requests
of recommended reports, further readings and other contacts has been made.
One telephone interview has also been conducted with one of the authors of the LCA-studies
conducted by IVL. The purpose was to partially to confirm and pose questions regarding
externalities and environmental impacts of the packaging industry as well as to get the raw
input data for the studies conducted. Unfortunately, the software used for the calculations
required personal log-in information combined with classified material, which means that the
methodology of calculations has not been confirmed. However, the reports reviewed for the
LCA have been approved in accordance with IVL’s audited and approved management system,
which is seen as a reliable and independent organization.
3.1.4 Data Analysis
When data has been gathered and analyzed a proposed model of the quantification of negative
externalities will be made. The analysis is not determinant to an exact cost, since numerous
assumptions and delimitations are made. However, the assumptions are double-checked and
triangulated between first and second sources in order to keep the estimations rational within
a certain margin (Karakaya, 2016). The general outline has been to gain an understanding of a
phenomena by reading up on available literature and then verifying these with other reports but
also by interviewing experts, which is a method of evaluating the validity (Collis and Hussey,
2003). Furthermore, different total cost estimations and industry related externalities will be
put into scenario categories and then be calculated and linked to each packaging material type.
This will allow varying methodologies from different reports to form an entity of as to what the
environmental costs might be. The different scenarios for the different externality groups listed
in the results section will then be assessed in low and high cost scenarios based on the varying
data estimations collected. An average cost based on the low and high cost scenarios will also
be put up, having a certain deviation and margin of error, which is inevitable. As proposed
by Blomkvist and Hallin (2015), inspiration from earlier studies methodology rationales can
be made. In this study it has been done regarding, for example, the evaluation of the beach
cleaning costs of externalities based on items collected, weight collected and salaries for the
volunteers. Lastly, in order to retain credibility for the calculations, the notion of MECE
(Mutually Exclusive, Collectively Exhaustive) will be used. The approach has its standpoint
in not accounting for the same factors twice in separate calculations, which could lead to a
higher estimated value than the actual reality (Rasiel, 1999).
The aim has been to keep a quantitative approach, since it is objective in its nature and con-
centrate at measuring phenomena (Collis and Hussey, 2003). However, when having finalized
the pre-study, it was found that there was a lack of quantitative data available. Therefore,
the analysis of the externalities are partially quantitative and partially qualitative. This is
will be a constraint in the quantitative results, but as Collis and Hussey (2003) explains, it
is important to recognize that one particular project can be described in a number of ways,
relying on the purpose, process and logic of the outcome. The externalities that are quantified
11
have been assessed partially from reports that have made estimations based on case studies or
surveys, but also from adding and combining variables found in other reports. This leads to
different scenarios being presented. The externalities that have been left out from the quanti-
tative assessment are evaluated qualitatively, either because of lack of research (e.g. effects of
additives in packaging materials on human health) or lack of information or data on the costs
that can be directly related to the packaging industry as such.
Finally, the environmental costs that are calculated will be presented in terms of how large the
annual costs are for respective case country in terms of expenditure, welfare, and revenue losses
caused by marine debris. Furthermore an add-on of the environmental cost on the retail cost
per bag and packaging material will be made. In some quantifications it has not been possible
to find exact data for the two case countries, the methodology has then been to extract and
convert numbers and data from similiar areas. For deeper information, see Appendix C.
3.2 Reliability and Validity
In order to evaluate the scientific quality of the report, the validity and reliability have to
be assessed. The validity of the thesis measures to what extent the research material and
performance corresponds to the intended research area. Reliability refers to the precision
and replicability of the study, meaning that given the same means to reach the objective,
it is plausible to assume that the same outcome would be achieved (Blomkvist and Hallin,
2015).
The reliability of the quantitative study in this report is considered to be relatively low. Given
the macro-level perspective and the extent that data relies on organizational reports, questions
could arise as to how impartial the outcome will be. In order to minimize these errors, numerous
studies’ estimations of data regarding externalities have been included, as well as low and high
cost scenarios in order to keep the report as unbiased as possible. As explained by Blomkvist
and Hallin (2015), the quantitative study provides a good overview of a phenomenon, which is
the intention in this report. On the other hand, the authors also point out that quantitative
studies can reduce the complexity of what is being studied and by omitting certain factors it
can certainly affect the outcome of the results and what is being studied. But as stated before,
the system boundaries are necessary to provide an overview, and will be supported by high and
low cost scenarios. The quantitative study also works well as a second phase of an inductive
explorative study to serve the purpose of this study (Blomkvist and Hallin, 2015). However,
it cannot be assured that all data and reports have been covered, and assessments of earlier
researchers quantifying methodologies have not been done thoroughly, but efforts have been
made in validating second sources by double-checking data with independent sources to verify
if the estimates are recurring and objective. Numbers used for the calculation models have
been triangulated with a minimum of three literature sources (to the best extent possible) in
combination with what industry experts have encountered and read, in order to strengthen the
reliability of input data. The notion of multiple sources of evidence is one of three principles
to follow when collecting data that will enhance the validity (Yin, 2009).
Moreover, environmental initiatives on regional levels might change the input data for various
areas in the study and the changes of litter from the packaging industry in the nature is fast
moving, dynamic and rather unpredictable (van Sebille, 2017). However, this does not mean
that the validity is weakened since the delimitations are necessary to make in order to reach a
feasible solution.
The literature review of concepts and theories is both valid and reliable, since academic elec-
tronic libraries and databases are exclusively utilized for this part of the thesis. For the reli-
ability of the quantitative study it is difficult to attain a high level since the calculations and
estimates are scarce and the reports that have attempted to quantify environmental impacts
are using different approaches and assumptions, which will make the input of data somewhat
mixed. However, in order to strengthen the reliability, the principle of maintaining a chain
12
of evidence throughout the data collection process and when conducting case studies on U.K.
and Indonesia will be followed. By listing a step-by-step calculation-model in Appendix C, a
reader may trace the evidentiary process backwards, thus increasing the reliability (Yin, 2009).
Furthermore, the available data often tend to bulk materials into one category, making it diffi-
cult to extract product categories like packaging materials. This difficulty has been confirmed
through interviews conducted both in the pre-study and the quantitative study, and it is has
been strongly recommended to make initial rational assumptions that later on can be verified
with available data in order to better grasp and wholly understand the relevance of the results
(Haag, 2017; Stripple, 2017).
3.3 Generalizability
The expression generalizability determines how well results and findings in a study can be
extended to natural settings or a greater population. In quantitative studies the generalizability
depends on how the sampling has been done and what methodologies that has been used in
order to assess how well one can generalize over the results. The size and representativeness
of a heterogeneous sample will determine if a quantitative study can be generalized into wider
terms (Blomkvist and Hallin, 2015). In this study generalizability is hard to achieve, meaning
that the results from the quantitative study will have a low estimate scenario that can be
verified by multiple sources and therefore be accurate in its generalizability. The high cost
scenario will provide insights of how large the environmental costs might be, but will require
further research to validate.
Since the quantification of environmental impact of plastics have not been fully covered in
previous research, generalizability will be hard to reach given the scale and time of the project.
However, when assessing and conducting the quantitative part of the study the aim is to
strengthen the validity by triangulating the information collected. Triangulation is the ratio-
nale for using multiple sources of evidence. This means that reports handed from the case
company in combination with previous research will be compared and analyzed with what is
said in interviews and put into perspective before interpreting and drawing conclusions (Yin,
2009).
13
4 Literature Review
In this chapter, theoretical concepts that are necessary to gain better insights of sustainability
issues are presented. These include the concept of circular economy, externalities, life cycle
assessment (LCA) and carbon pricing.
4.1 The Circular Economy
Popularized in China in the 1990s, the circular economy model and framework developed as
a response to the rapid use of exhaustible natural resources without regards to recyclable or
re-use at the time. It has since been widely adopted by governments and organizations alike
(Murray et al. 2015; Winans, 2017). The circular economy (CE) is mentioned as one of the
most effective instruments for transitioning society towards a more resource-efficient one and
to integrate economic activity and environmental well being (Tukker, 2013).
The theoretical concept of a circular economy is not yet fully stated and determined, but the
general idea is to promote greater resource productivity aiming to reduce waste. As described
by Esposito et al. (2017):
”To put it simply, the circular economy’s goal is to preserve our current way of life by making
it technically viable for the longer term by producing within a closed system, or loop, where
firms reuse by a process of disassembling, recouping and recovering, reinforcing, and, finally,
repurposing materials already in use. On a fundamental basis, the circular economy recognizes
and addresses the problem of low utilization.”
Figure 3: Linear vs Circular Economy
There are two types of material flows suggested in a circular economy: 1) Biological nutrients,
designed to reenter the biosphere safely and 2) Technical nutrients that are restorative and
regenerative by design (Murray et al., 2015). For companies striving towards circular business
operations, this means identifying and creating more value for the products already paid for, by
not only viewing the first iteration of a value chain but rather the entire value chain, including
system boundaries with additional iterations in mind (Esposito et al., 2017).
In industrial ecology the circular economy also provide benefits obtained by minimizing the use
of virgin feedstocks for economic activity and accordingly, minimizing the use of the environ-
ment as a sink for residual waste (Andersen, 2007). By using a predictive scenario, researchers
14
have estimated that the CE could mean cost savings on materials of $ 1 trillion by 2025 for
the United States alone (Ellen MacArthur, 2015).
4.1.1 The Circular Economy in Business
For businesses the circular economy provides a very interesting and new approach to operational
decisions. Arguably the circular economy concept have the possibility of becoming a necessity
for companies wanting to stay competitive. As argued by Porter and Van der Linde in “ Green
and Competitive: Ending the Stalemate” (1995) adopting a CE mindset in a business can
result in significant cost savings as well as promote innovation in organizations. As exemplified
by Porter and Van der Linde (1995), companies in a non-closed loop are responsible for the
costly and non value-adding task of handling storage and disposal of discharge. Not only
does this mean an inefficient organization as resources are not fully utilized but companies
must also pay an additional cost to handle the waste. Focusing on greater resource utilization
however, decreases variable costs as well as promotes innovative methods to increase both
resource efficiency and to reduce waste (Porter and Van der Linde, 1995).
Resource productivity has become an even more important in the global competitive climate.
Today, the nations and companies that are most competitive are not those with access to the
lowest-cost inputs but those that employ the most advanced technology and methods in using
their inputs. However, if environmental initiatives that focus on resource conservation and
innovation are so profitable, why are not they being embraced more enthusiastically by all
businesses. They point to the limits of time and attention as well as the inability of managers
to fully grasp the opportunities with becoming more circular. In many instances, companies do
not even track their environmental spending, but rather judges them as standalone investments.
For this, they argue that government interventions are necessary to clearly communicate to
companies the costs involved. This to help companies make the right decisions to become more
green, innovative and efficient in terms of resources (Porter and Van der Linde 1995).
4.2 Externalities
The definition of an externality, or market failure, is the notion of an additional cost or benefit
of a transaction upon a third party not directly involved in the transaction. The market failure
can either be classified as a positive or a negative externality, depending on if it provides an
additional benefit or a drawback to the third party. When the additional cost is not taken
into account, the lower price result in an over-consumption at the marginal cost rather than at
the levels of marginal societal cost, where the cost of the marginal external effect is included
(Ahlersten, 2006).
Negative environmental impact is such an externality that needs to be included in the costs
to avoid an excess consumption and a negative welfare loss for society as a whole. EIA (1995)
narrows down to seven approaches to do so; qualitative treatment, weighting and ranking, per-
centage adders, cost of control, damage function, monetization by emission, and multiattribute
trade-off analysis.
Internalizing costs (i.e. accounting for them) is according to Prud’homme (2001), necessary
to make economic agents aware of the costs they inflict upon society, prompting them to
alter their behavior towards socially optimal production and consumption. In general, there
is currently no consensus about how to assign the relative weight for each impact category
or damage category in monetary terms within the scientific community. Undoubtedly, there
is uncertainty associated with the factors used to weight or monetize the impact in different
impact/damage categories due to subjective preference for value (Inaba, 2013).
Internalization of external costs can be achieved by a variety of instruments, among others
ecological fees, bonus–malus systems, tolls, and above all ecological or environmental tax re-
15
forms (ETR), as listed by Soliwoda and Pawlowska-Tyszko (2015). These can be summarized
into two major approaches to impose the costs caused by negative externalities. The first
approach is introducing a corrective tax or cost to adjust the marginal private cost of a good
or service to internalize the externality (Hyman, 2010). The second one is to apply reduced
VAT (value added tax) rates on more environmentally friendly competitive alternatives, giving
them a price advantage over conventional products (Albrecht, 2006). Because of the limited
reports and their various research methods, both of these approaches will be used and both
are viewed as valid.
4.3 Life Cycle Assessment
To monetize emissions, the Life Cycle Assessment (LCA) is recognized as a standard and
structured method for evaluating the environmental impact throughout the entire lifecycle of a
process or product. LCA is particularly helpful as it allows clustering of activities into different
steps as well as grouping impact categories, which facilitates the monetization of the environ-
mental impact. After the different steps of the value chain have been identified the impacts
could then either be weighted or normalized. Normalization in this regard refers to the ability
to show the significance of the calculated impact category on the overall environmental impact,
whereas weighing is to aggregate the midpoints into a single endpoint indicator (Nguyen et al
2016). To monetize and to understand the societal cost of these emissions it is necessary to
determine a cost for CO2-pollution.
4.4 Carbon Pricing Models
There have been numerous studies aiming to quantify and put a price on the environmental
impact of CO2. The main difficulty has so far been to set the system boundaries as well as
to calculate the effects on the environment (World Bank, 2016). For this study we attempt to
find the analysis on the study performed by Stipple et al. (2016) by including all parts of the
LCA, including end-of-life. Today there is currently no all-covering international system to
compensate for the pollution of CO2 although there exists several estimates of what the cost
of CO2 should or could be.
There are two approaches to set up a system to decrease or limit the emissions of GHG and
other hazardous emissions. The most common system that is used in the European Union,
Liechtenstein, and Norway is the Emission Trading System (ETS) or “cap and trade”. In
an ETS there is a fixed amount of carbon emission rights, i.e. the right to emit a certain
amount of GHG, which are bought and sold depending on demand. Which entities that are
required to possess a carbon emission right varies between each system. For example in the
current European system all entities whose activities or products cause emissions are required
to possess emission rights. The other alternative is to apply a tax to all carbon emissions
(World Bank, 2016).
Both these systems provide several challenges when attempting to use them in practice. For
example, the ETS system results in fluctuating prices that makes the basis of an average
questionable (Ellerman Joskow, 2008). For the carbon tax, it is arguably a highly political
question where partisanship and party politics play a role and is therefore also not deemed
to give a desired representation on the price of carbon emission. A carbon tax is therefore
dependent on various variables not attached to the environmental cost or impact of CO2.
Because of this, a normative approach to the price of CO2 is necessary and preferable.
In the Paris climate conference in 2015, governments accounting for 96 percent of all GHG
emissions, representing 98 % of the world’s population were present and committed to keep the
global temperature increase below 2 degree Celsius from what they were before the industrial
16
revolution in the 19th century to the year of 2100. To reach this goal the World Bank (2016)
estimates that the price of CO2 pollution needs to be between $ 80 - 120/tCO2e by 2030.
Additional pricing models used in the calculations are the taken from the “Temperature impacts
on economic growth warrant stringent mitigation policy” by Moore and Diaz (2015) as well as
the United States Environmental Protection Agency (EPA) social cost estimations. Their cost
estimations vary from $ 37- 220/tCO2e. The reason for the large discrepancy is that the EPA
study fully disregards the fact that increasing environmental pollution will not inhibit or affect
economic growth and therefore has a rather low price of $ 37 compared to the other models.
The CO2 price estimated by EPA is therefore regarded as only partially including the costs
and will not be included as a basis for calculations.
17
5 Mapping the Externalities
In this chapter the externalities linked to the packaging industry will be presented, more specifi-
cally the ones related to the two materials investigated, as well as the two case countries United
Kingdom and Indonesia.
5.1 Case Countries
In order to understand the economic effects of both plastic and paper packaging products
have on individual countries, two case countries will be studied further. The chosen countries
are United Kingdom and Indonesia, since both are island nations heavily affected by the
increasing ocean pollution, their differing geographical positions, their differing recycling habits
and different packaging consumption. Furthermore, they have also been chosen due to data
availability and to see if there are different magnitudes to the problems occurring in respective
country due to their different prerequisites.
United Kingdom
As an island nation the United Kingdom is heavily exposed to the issues of ocean littering
and was one of the first countries to report of microplastic findings in their beach sediments
(Thompson et al., 2004). Since then, the issue has gained much attention, producing extensive
research into the effects of leakage and alarming reports that it is currently very difficult to
find animals in the UK which has not ingested plastic. This issue of littering in the UK is also
especially important as the leakage from the U.K. is transported by ocean currents into the
Arctic where it has the potential to do extreme harm to the fragile polar environment (Levey,
2016).
Indonesia
As an island nation too, Indonesia is also heavily exposed to the issue of plastic pollution,
but unlike the U.K., Indonesia is currently one of the biggest contributors to ocean pollution,
representing one of the five countries responsible for half of all land based leakage of plas-
tics. The issue of marine pollution poses a significant threat to both vital growth industries
such as fishing and tourism as well as the unique indigenous biodiversity in Indonesia (Ocean
Conservancy, 2015).
5.2 Identifying the Externalities Using United Nations’ Sustainable

Development Goals
Aside from the direct pollution from the value chain, the packaging industry is responsible for
significant environmental impact because of what happens with the packaging material after
consumption. Unfortunately it is not possible to map or identify all of these effects during this
study. The negative externalities examined have been limited to those that can be derived from
the United Nations’ Sustainable Development Goals (UN, 2015) as presented below
18
Figure 4: United Nations’ sustainability goals
(UN, 2015)
The SDGs that have been identified and related to the packaging industry are the follow-
ing:
• 3. Good Health and Well-being
• 8. Decent Work and Economic Growth
• 12. Responsible Consumption and Production
• 13. Climate Action
• 14. Life Below Water
• 15. Life On Land
From these six categories, the externalities listed in section 5.3 have been identified as areas
affected by the packaging industry. The details concerning each area is described in chapter
6.
5.3 Measuring Areas
There have been numerous studies mapping the externalities of the packaging industry, mainly
relating to the after-use aspects of packaging materials. What has been commonly noted is
that littering affects a wide range of industry sectors, wildlife, ecosystems and possibly human
health. Mouat et al. (2010) highlight the following areas as being affected: agriculture, aqua-
culture, fisheries, harbors, industrial seawater users, marinas, municipalities, power stations,
rescue services, voluntary organizations and water authorities. McIlgorm et al. (2008) includes
the following areas in their study of the costs of marine debris: the fishing, transportation,
tourism, and insurance industries, and damage to leisure crafts. Lastly, Avio et al. (2016) lists
the negative repercussions from plastics in the marine environment as the following: aesthetic
issues, beach cleaning, and adverse biological and ecological effects. However, in these three
19
studies, it is only marine litter that is the area of investigation. This reason for this, as de-
scribed in the reports, is that the oceans functions as a collection for all land based litter. For
this report, the chosen areas will be put forward in relation to the relevance and connection to
the packaging industry as a whole, thus covering a larger spectrum.
The externalities that are to be mapped and quantified are therefore, as seen in Figure 5
below, covering slightly different areas compared to McIlgorm et al., 2008; Mouat et al., 2010
& Avio et al., 2016. It shall also be noted that each area might include additional sub-related
points since the concrete interrelation is complex due to system interconnectivities and one
source/type of litter cannot solely account for the problems and costs caused by littering as a
whole.
Figure 5: Value chain and negative externalities caused by paper and plastic packaging products
20
6 Assessing the Externalities
In this section, the externalities identified will be presented and evaluated qualitatively.
6.1 The Externalities from Paper and Plastic Bags
When paper and plastic packaging have been used and disposed of, the materials start to
decompose and break down into smaller pieces. The key difference between the two materials
is how long this process is, and what the residues are. Plastic packaging can have a lifespan
up to 500 years, depending on type of plastic, before it is fully decomposed. During that time,
the plastic packaging product will break down into smaller pieces that cause problems for its
surrounding environment (McIlgorm et al., 2008; Science Learning Hub, 2008). The negative
externalities that are linked to plastics are concentrated into three main areas:
• Degradation of natural systems, the ocean in particular, as a result of leakage.
• Greenhouse gas emissions stemming from production and after-use combustion.
• Health and environmental impacts from substances
(World Economic Forum et al., 2016).
Paper materials on the other hand have a far shorter lifespan, decomposing much quicker than
plastic bags. The paper bags examined in this study, made from virgin kraft paper or recycled
fiber (85%) are fully dissolved in roughly 6 months (Dahlgren and Stripple, 2016; Haag, 2017).
During this time, it will have dissolved into microscopic pieces, ending up either as sediment or
being ingested by animals. There are no scientific studies or indications that paper materials
have a significant negative impact on ecosystems or wildlife. The impact from paper bags
are reduced even further as pulp and paper companies mostly use renewable feedstock (Haag,
2017).
6.2 CO2 Impact
The two studies that will be used for determining the CO2 impact from the materials’ value
chains are the IVL studies “Life Cycle Assessment - Comparative study of virgin fibre based
packaging products with competing plastic materials” (2015) and “A comparative LCA study
of various concepts for shopping bags and cement sacks” (2016) both commissioned by the
pulp and paper company BillerudKorsnäs. In Dahlgren et al. (2016) paper products are
compared with competitive plastic alternatives and measures the environmental impact from
four perspectives;
1. Global Warming potential
2. Eutrophication potential
3. Acidification potential
4. Photochemical ozone creation potential
In order to make a thorough comparison between plastic and fibre-based materials, it has
to be based on the same performance indicators and quantifying measures. These are called
functional units, which means that a standardized set of factors set the foundation for the
evaluation and makes the different value chains and product systems comparable (Dahlgren
and Stripple, 2016). The impact categories include various substances limited to: CO, CO2,
SO2, CH4, NOx. For our purposes, the economic comparison of plastic and paper will be done
based on their Global Warming Potential (GWP), since it measures the impact in terms of
CO2-equivalents that can be quantified with the help of the carbon pricing models presented
21
in section 4.4. The pollution of Global Warming Potential measured in CO2 equivalents refers
to the emissions released from human activities that contributes to the augmentation of the
global temperature.
In the LCA analysis carried out by (Dahlgren and Stripple, 2016), comparing various concepts
for shopping bags with competing plastic materials, the comparison between shopping bags
will primarily be used. For the United Kingdom, the conversion place for all bags was selected
to be Frankfurt with the final use in England. The study examined the value chain from five
distinct approaches: material production, material transport, packaging production, packaging
transport, use and end-of-life (Dahlgren and Stripple, 2016).
• Recycled LDPE (50%)
The recycled LDPE bag (50%) was modeled as 50% post-consumer and 50% consumer
plastic. In the study IVL used data from “Miljösäck” for the pre-consumer and post-
consumer, which was approximated with virgin material. The study also included a
sensitivity analysis with 100% post-consumer, meaning the entire bag was manufactured
from recycled plastic (Dahlgren and Stripple, 2016).
• Renewable LDPE
For the renewable LDPE bag the polyethylene was assumed to be produced from sugar
canes. The study assumed the material origin (sugar cane cultivation) to take place
in Brazil, currently the largest sugarcane ethanol producer in the world (Dahlgren and
Stripple, 2016).
• BillerudKorsnäs shopping bag
The BillerudKorsnäs product used for comparison is a shopping bag made from virgin
Kraft produced at Skärblacka Mill as well as a recycled paper alternative.
• Recycled Paper Bag (85%)
The recycled paper bag is assumed to be manufactured in Germany with up to 85%
recycled fiber.
Figure 6: Grams CO2-equivalents per bag type throughout the value chain
(Dahlgren and Stripple, 2016).
22
In Figure 22, the results from the are displayed. It was found that BillerudKorsnäs’ bag
has a remarkably lower environmental impact compared to other bags. In the base case, it
has a 59 % lower global warming potential than the recycled LDPE bag, followed by the
recycled paper bag which has the second lowest impact. Furthermore, it was found that the
choice of material as well as the material production had the largest impact out of the overall
environmental impact for the different products. The clear advantage BillerudKorsnäs have
over other compared products, in environmental terms, is the almost completely renewable
production at Skärblacka, which means that the environmental impact becomes substantially
lower for the BillerudKorsnäs bag (Dahlgren and Stripple, 2016).
In the LCA analysis comparing virgin fibre-based packaging products with competing plastic
materials, it is found that they have a significantly higher energy content than the paper
alternatives, which means that it is far more effective to produce heat or electricity from
plastic than from paper. However, as it is a fossil based material, the energy released from
incineration emits a significant amount of CO2, which makes it a less environmentally suitable
option. It is also worth noting that plastic is a much lighter material that can be packed
and transported more effectively than paper. However, the transportation represents a mere
fraction of the overall global warming potential.
Because the (Dahlgren and Stripple, 2016) is based on the United Kingdom the results also
needed to be adjusted to also be representative for Indonesia. This is done with the help of
Dahlgren and Stripple (2015) which includes an analysis of cement sacks sold in Indonesia. The
converting for the Indonesia market was assumed to take place in Indonesia as the converting
often takes place as close to the final consumers as possible (Haag, 2017). The assumptions
are further specified in detail in Appendix C.
6.3 Marine Debris
Marine debris is defined as the following by McIlgorm et al. (2008):

“Marine litter, marine garbage and ocean debris, is defined as any manufactured or processed
solid waste material that enters the marine environment from any source whether on land or
at sea”
McIlgorm et al. (2008) states that the following materials are the most commonly found marine
debris:
• Plastics (fragments, sheets, bags, containers)
• Polystyrene (cups, packaging, buoys)
• Rubber (gloves, boots, tyres)
• Wood (construction timbers, pallets)
• Metals (beverage cans, oil drums, aerosol containers)
• Sanitary or sewage-related items (condoms, tampons)
• Paper and cardboard
• Cloth (clothing, furnishings, shoes)
• Glass (bottles, light bulbs)
• Pottery/ceramic
• Munitions (phosphorous flares)
23
The sources of marine litter stems from numerous activities, as illustrated in Figure 7. The
following sources of marine litter have been identified by Surfers Against Sewage (2014):
1. Sewage related debris
2. Litter dropped in towns and cities
3. Poorly managed bins and landfill sites near the coast
4. Lost fishing equipment
5. Shipping materials lost overboard
6. Poorly managed industries
7. Litter dropped at the beach
Figure 7: Source of marine litter

(Surfers Against Sewage, 2014).
Plastic is, by far, the most common type of marine litter, estimated to comprise 60-80 % of
the total waste encountered in the ocean (Allsopp et al., 2006; McIlgorm et al., 2008; UNEP,
2014). Roughly 10% of the annual production of plastic ends up in oceans (Avio et al., 2016),
resulting in an annual leakage of 9.1 million tons estimated by Jambeck et al. (2015) although
this is debated. Others believe that the leakage is much higher, estimated to 12.2 million tons
by Eunomia (2016) or 20 million tons estimated by Gold et al. (2013). 80 % of the plastic
waste leaking into oceans derives from land-based sources, such as from landfills or littering.
The remaining 20 %, stems from marine-based activities such as shipping, cruise lines and
fishing (Allsopp et al., 2006; UNEP, 2014). Paper materials on the other hand is not listed
nor as to what extent and percentage of items found in the ocean that derives from paper
production. It has been assumed in this thesis that the paper bags decompose or break down
into smaller pieces relatively quickly (maximum of 6 months), where paper bags decompose
faster than cardboard and thicker paper materials for example (Haag, 2017).
24
Far from all plastics washes up on shore and there is no determinant way to state where the
plastics actually end up. According to Eunomia (2016) roughly 1% of all plastic that ends
up in the ocean floats on the surface whereas 94 % sinks into the ocean and 5 % ends up on
beaches, as displayed in Figure 8. UNEP (2014) on the other hand, states that 70 % of the
debris sinks to the seabed, 15 % floats and the last 15 % is located in the water column. Lastly,
Barnes et al. (2009) & Eriksen et al. (2014) states that 70 % of the marine litter is located on
the seabed, 15 % in the water column and that 15 % ends up on beaches. For our purposes
all different scenarios have been used in the calculations, for more information, see Appendix
C.
Figure 8: Where Plastics End up

(Eunomia, 2016).
Whether plastic sinks or not affects its decomposition rate, as lower temperatures and lower
degree of sunlight further decreases decomposing rates (Eunomia, 2016). Generally, physical
abrasion, such as wave action and sand grinding, leads plastic to degrade into smaller em-
brittlement and fragmentation eventually becoming microsized plastics i.e. microplastics, not
visible to the naked eye (Avio et al., 2016). These microplastics are now a commonplace in
the oceans, found in both fish and wildlife. The concentration of microplastics vary by region,
mostly centered around five accumulation zones, gyres, as illustrated below in Figure 9 (Cózar
et al., 2014).
25
Figure 9: Concentration of plastics
(Cózar et al., 2014).
The highest concentration of plastics is found in the South Pacific, due to the high concentration
of people living in coastal areas as well as the size of the gyre (Cózar et al., 2014).
The costs related to marine litter can be divided into different sub-segments, depending on the
complexity and uncertainty related to each segment. There are the direct costs that are easier
to evaluate in economic terms, e.g. increased costs of cleaning and removing plastic waste.
Others are more complex and indirect, such as ecosystem deterioration or reduction in quality
of life. Furthermore, differentiation can be made for costs linked to biodiversity (species and
habitats), damages to ecosystem services, e.g. food provision, water and waste purification,
tourism and recreation. Estimations on the existing amount of marine litter is composed on
dynamic and complex processes, which in turn makes quantifying the costs on global levels
difficult to investigate. In this segment the general outline will be measuring and quantifying
of economic costs of expenditure, welfare losses and revenue losses caused by marine debris. It
has become more apparent that marine waste causes environmental issues as well as economic
impacts, reducing economic benefits derived from marine and coastal activities. Areas such
as human health concerns and ecosystem degradation have not been economically assessed
thoroughly, thus presenting difficulties in attempting to quantify the costs (Newman et al.,
2015).
6.4 Beach Cleanup
The difficulty when using studies to assess the cost of beach/coastal cleanup is that this does
not capture the entirety of the problem. For instance, basing calculations on past or current
cleanup efforts does not give the full cost of removing coastal litter today. Another difficulty is
that if one country simply ignores marine debris in coastal areas, this is not recorded as a cost
due to plastic pollution. On the other hand, if a tourist resort spends a lot of money keeping
beaches pristine, this does not reflect the cost for the rest of the country. Because of this, the
labor cost per item and unit of weight for cleaning beaches and coastal areas have been based
on the universal cost estimates made by McIlgorm et al. (2008). This has then been quantified
using the total marine leakage from each individual country to illustrate what cost they impose
at local level.
However, it is worth noting that not all marine leakage will eventually end up beaches. Exactly
what happens to materials entering the ocean is not fully understood and there are different
26
opinions as to what percentage washes back up on shore. The studies which will be used as a
basis for the calculations are UNEP (2014), Eriksen et al. (2014), and Eunomia (2016). These
three studies determine the level of marine debris that washes up on shores ranges from 5-15
% of total ocean leakage. This cost is not something that would necessarily affect the specific
case country but could affect nearby countries due to the streams and accumulation zones
presented by Cózar et al. (2014). However, in this thesis the debris is considered to be rather
static due to the complexity of determining the origin of the debris.
Indonesia
In the study conducted by McIlgorm et al., (2008) an estimation of the total cost of marine
debris in the Asian-Pacific (APEC) region was carried out. The study was based on data
available from 2006, thus it is likely that the costs have been elevated since. The study
concluded that marine debris (where plastics account for up to 80 %) has a damage value of
e1.2 billion/year for the region. This includes damaging to the fishing, shipping and tourism
industries. Furthermore, the cleanup cost in the APEC region has been estimated to be e1200-
1400/ton. This value is an average based over a six-year period and has been confirmed by
data from outside the APEC region. It should be noted that less developed regions have lower
cleanup associated costs per item or weight of debris collected, due to lower labor cost, varying
type of debris, geographical debris density and depending on mechanical or manual cleaning
methods.
The McIlgorm et al., (2008) study based their beach cleanup cost on an analysis upon the
International Coastal Cleanup (ICC) initiative, in which 14 APEC economies cleaned up the
shorelines and recorded the result. The 14 APEC economies participating in the ICC consti-
tuted of 314,207 people who collected 6,107,258 items, weighing a total of 2,293,326 kilograms
during a weekend. Excerpts of their findings are listed below:
Figure 10: Most frequent items collected during the International Coastal Cleanup Day in 2007
(McIlgorm et al., 2008).
Bags represented 7.25 % of all debris found, and most of these bags are assumed to be plastic,
due to the durability of the material. It is likely that paper materials would break down into
smaller pieces, which would make them difficult to identify as bags for volunteers (McIlgorm et
al., 2008). These findings are used as a basis for calculating the average cost per item collected
27
in combination with the total of 0.5-1.3 million tons of waste reported being leaked into the
ocean annually from Indonesia (Havas Oegroseno, 2016; Jambeck, 2015).
United Kingdom
For the U.K. there have been an extensive case and survey study carried out by Mouat et
al. (2010), which aims to map all separate cost associated with marine litter. All coastal
municipalities was estimated to spend e 18-19 million annually on coastal cleanup efforts,
which equates to an average cost of e 146,000 per municipality. The most part of this cost
was accounted for by the labor cost. An average cost of litter removal calculated per km and
year was also estimated by the researchers and was set between e,000-7,300 although with a
lot of variation (e71-82,000). The cost variation differs a lot as beach cleaning is performed by
municipalities and/or voluntary organizations, meaning that the labor cost is different.
In cleanup initiatives and efforts, volunteers have fairly low or no pay. However, their work can
be put in terms of opportunity cost, meaning they could have performed other work instead
of cleaning beaches. As mentioned earlier, the cost per worker is therefore set to e47, e94,
and e142 per day, as proposed by McIlgorm et al. (2008) and will provide three different
cost scenarios. Furthermore, based on the Great British Beach Clean performed in 2016, the
number of items collected by the number of workers provides an estimation of what each item
costs to pick up by a worker. The percentage of plastic bags collected during the beach cleanup
initiative was 7 bags per 100 meter or 1.1 % of the total number of debris collected (Marine
Conservation Society, 2016) and is assumed to be true for the whole region in the calculations,
whilst Lee (2015) estimates that 2 % of all debris on beaches are plastic bags.
According to a survey conducted by Marine Conservation Society (2016), there are on average
2,300 items found for every km of coastal line in the U.K., which equates to a total estimate
of 41,000,000 pieces of marine litter along the British mainland coast. These estimates on
the percentage of plastic bags and estimated number of waste will form the basis for the
calculations.
6.5 City Cleanup
Since 80 % of the marine debris stems from land-based sources, cities and communities plays
a vital roll in minimizing and preventing waste from entering oceans (Allsopp et al., 2006;
UNEP, 2014). Most of the responsibility for managing waste falls on local governments, and
communities themselves experience direct and significant expenses in reducing and preventing
marine debris. Monroe et al. (2013) who studied plastic packaging’s economic effects on
Californian cities and communities categorized the costs into six separate categories:
• Waterway and Beach cleanup
This category refers the cost of waterway and beach cleanup efforts. The cost is usu-
ally higher for coastal cities and communities as the outlet of rivers often causes large
litter concentrations. Inland communities often do not realize their responsibility, which
explains why the cost of litter for these communities is lower.
• Street Sweeping
Street sweeping is partly made for aesthetic reasons but is also necessary as it removes
sediment and protect waterways from contamination from litter.
• Stormwater Capture Devices
Of the trash entering and generated in a community, some eventually ends up in the
storm drains. The more trash, the more complex a device the community will need to
capture litter (and costs can vary accordingly, ranging from $75,000 - $300,000).
• Storm Drain Cleaning and Maintenance
28
In order to function properly, the storm drains need to be maintained and free from litter.
• Manual Cleanup
Manual cleanup programs are the initiatives to remove litter not covered in the street or
coastal cleaning categories. These could be performed on a regular or responsive basis.
• Public Education
To limit and decrease littering in communities; municipalities and cities spend resources
on public education to prevent the negative effects of littering.
Figure 11: Share of Cleanup Cost

(Monroe et al., 2013).
Out of the total cleanup cost, Monroe et al. (2013) reported that 8-25 % of the cleanup cost can
be directly attributed to plastic bags. They also found that the cleanup cost varied significantly
between cities depending on a wide set of factors. For example, whether or not they city or
community is situated close to large bodies of water, the storm drainage systems, propensity
to recycle, if a city is concerned with clean public spaces, etc. Monroe et al. (2013) points out
that there were communities in the study where there was no concern over littering and where
the mentality was that the litter eventually becomes someone-else’s problem. This means that,
depending on the community, the cost of plastic packaging could be very high or essentially
non-existent. However, Monroe et al. (2013) singles out Los Angeles and San Diego as more
representative as to what the cost per year is to combat and cleanup litter. Their findings are
described below:
• Los Angeles with a population of 3.8 million, spends e 8.5 per capita and a total of e
34 million per year.
• San Diego with a population of 1.3 million, spends e 9.6 per capita and a total of e 13.2
million per year.
• The average for the six largest cities investigated (including Los Angeles and San Diego)
is an annual cost of e 13.2 million and a per capita cost of e 10.7.
Indonesia (Jakarta) & United Kingdom (London)
For the city cleanup cost for Indonesia (Jakarta) and United Kingdom (London), the cleanup
cost will be calculated based upon the numbers provided by Monroe et al., (2013), adjusted
for Purchasing Power Parity (PPP) and city size. This will be done for the interval of damages
29
caused by plastic bags as well as the different cost per capita levels. For more information,
Appendix C is referred.
6.6 Fishing Industry
The fishing industry is affected by marine debris as it can get stuck in nets, entangle and foul
propellers, and/or block intake pipes and valves on vessels. This means that the litter incur
costs in forms of having to replace destroyed fishing gear and cleaning of litter in nets which
leads to lost fishing time and a reduction in potential harvestable catch (Mouat et al., 2010;
Newman et al., 2015). In this report the focus will lie on the direct costs affecting the fishing
vessels, which includes repairing of gears and losses in earnings due to replacing and cleaning
nets (McIlgorm, 2011). Indirect costs to the fishing industry such as ecosystem deterioration,
wildlife and human health concerns will not be quantified within this segment, but will be
explored qualitatively in later sections.
United Kingdom
It has been estimated that each fishing vessel in Scotland lost between e 17,000-19,000 per
year due to marine litter, where two-thirds was incurred by time spent cleaning waste from
the nets. Aggregated, the total cost was e 11.7-13 million per year, representing 5 % of the
Scottish fleet’s total revenue (Mouat et al., 2010).
To scale the cost up for the entire U.K., the Marine Management Organisation’s 2015 official
statistics are utilized in combination with the cost estimations made by Mouat et al., 2010. In
Scotland the total number of fishing vessels was 2,075 with 607 of them representing vessels
larger than 10 meters. With the starting point of e 11.7-13 million per year, an assumption
that all costs occurs in the large vessels and with the average cost per vessel being e 18,000,
the total leads to e 10.9 million/year, which is roughly the same as the total estimate made for
Scotland in total by Mouat et al. (2010). The same approach is used to calculate the cost for
the U.K. as a whole; the number of fishing vessels larger than 10 meters was 1,374 in 2012 and
with the average cost of e 18,000/vessel, the total revenue loss due to cleaning nets, repairing
gears and rescue boats for entangled propellers is e 24.7m/year. Lastly, an estimation of Lee
(2015) is utilized where it is stated that marine debris and microplastics incur damages to
fisheries and aquaculture of e 31.5-41.8 million every year, where plastics represent 60-80 % of
these costs and 40 % out of all plastics are bags, which means that roughly e 18.9-33.4 million
is the annual cost caused by plastic bags to the British fishing industry per year.
Indonesia
For the case of Indonesia, the same issues affecting British fishing fleet is predicted to also
affect the Indonesian fishing fleet in a similar manner. Unfortunately there have been no
studies outlining the costs incurred on the Indonesian fishing industry, therefore a comparison
between the sizes of the annual fishing industry’s catch and wages will be the base of conversion
from U.K. to Indonesia. Two cost scenarios are based on the estimations made by Mouat et al.
(2010) whilst the other two are based on Lee’s (2015) calculations. The European Maritime
and Fisheries Fund (EMFF, 2014) states that the average annual wage for a British fisherman is
e 23,700 whilst the wage in Indonesia is e 5,500 (Salary Explorer, 2017). The fishing industry
catch for respective country is 414,725 metric tons in U.K., based on an average over the years
2011-2015 (Marine Management Organisation, 2015), and 6,386,000 metric tons for Indonesia
in 2012 (FAO, 2012).
30
6.7 Agriculture
The problems that marine litter may cause to agricultural properties in coastal communities
are: damage to property and equipment, harm to livestock and the cost of removing the litter.
In a survey conducted by Mouat et al. (2010) crofters were asked what type of litter that was
found on their property, 95 % reported that plastics was found, followed by ropes, nets and
strapping bands which were reported to be present in 65-75 % of the cases. The harm incurred
on farms stems to a large extent from marine litter that blows onto land and eventually ends
up on the farms (Mouat et al., 2010).
Livestock and wildlife were affected by litter by either being entangled in nets or mistaking
waste as food, thus ingesting harmful materials. In some cases this has lead to increasing
veterinarian bills for farms with livestock. The cost of damage to property comprises of clearing
and repairing fences, removing litter from drainage ditches and in some cases repairing machines
that were damaged. Furthermore, time spent performing these tasks were on average about
80 hours/year per farmer, based on 11 responses. The study was conducted on the Shetland
Islands in Scotland and the cost of marine litter on the agriculture industry here was estimated
to be e 252,000 annually. 85 % of the costs are due to removing litter from land, fences and
ditches and 11 % was costs of replacing damaged fences (Mouat et al., 2010).
Due to the relatively small selection of the survey, it has been decided not to include harm
to the agricultural industry in the quantitative part of the study, since the calculations would
have too many uncertainties. However, the problems listed above do affect farmers both in
the U.K. and Indonesia and should be of concern. Particularly for coastal communities where
marine debris blowing up on land affects them to a larger extent than for inland farmers.
6.8 Tourism
For tourists wanting to visit coastline municipalities, clean beaches are a priority when choosing
where to visit. Hence marine debris can act as a deterrent for visitors. If a coastal municipality
receives a reputation for being polluted with marine debris, it will naturally attract fewer vis-
itors (Mouat et al., 2010). Furthermore, if marine debris levels remain high in a given tourist
area it may discourage new private investments in hotel developments or other tourist attrac-
tions since the debris attract less visitors (McIlgorm et al., 2011). However, it is important to
recall that tourist organizations do not have direct costs of removing litter, since this usually is
the responsibility of municipalities. Nevertheless, the indirect costs in form of poor reputation
can negatively affect the economic development of such an area (Mouat et al., 2010).
6.9 Wildlife
Plastic litter in the oceans, injures and kills wildlife. Items such as plastic bags, strapping for
packages or abandoned fishing net can cause death to fish and aquatic animals by drowning,
suffocation or strangulation (Allsopp et al., 2006). Furthermore, bottle caps, plastic cutlery,
cigarette lighters, etc. can be wrongfully perceived as food and harm animals through internal
damage and starvation, since their digestive systems cannot break down the pieces (UNEP,
2014). Pieces that cannot be digested will obstruct the animals from escaping from predators,
decrease body condition and impairment of locomotion, including migration (Avio et al., 2016).
Ingestion of plastics are particularly dangerous since toxicants in the material can reduce the
reproduction capability in certain species and cause malnutrition (Allsopp et al., 2006; Flores,
2008).
Marine mammals, seabirds, turtles, and fishes are the most impacted organisms by microdebris.
In the North Sea, 96 % of the fulmars have been reported to contain at least one piece of
plastic in the stomach. Since plastic leakage is expected to increase, the number of influenced
31
species will grow with it. Ingesting waste along with food is the most likely interaction with
microplastics for many organisms. But for some species, such as shore crabs and filter feeding
bivalves, microplastics are also encountered through the gills due to ventilation mechanisms
(Avio et al., 2016).
6.10 Health Concerns
Numerous studies have investigated plastic debris’ affect on marine and terrestrial habitats.
Not only being an aesthetic eyesore but it has also been concluded that plastic waste contains
hydrophobic contaminants, meaning they are not dissolved in humid environments. These
plastic pieces will then be mistaken as food by animals (e.g. birds, fish, marine mammals) some
of which are at the lower ranks of the food chain. Eventually this either means that animals
die due to starvation, since the plastic materials cannot be digested, or that the contaminants
bioaccumulates throughout the food chain and could be ingested by human beings (Teuten et
al., 2007). The microplastics might then release plasticizers and adsorbed pollutants after the
ingestion by a wide variety of marine organisms. The biological toxins and chemicals is yet
an area to be explored as to what ecological effects for bioaccumulation and biomagnification
might have and what societal costs they might incur (Teuten et al., 2009).
In Figure 12 below, it is displayed how marine wildlife can ingest plastic waste and how plastics
bioaccumulate along the food chain, eventually ending up in human bodies (Surfers Against
Sewage, 2014).
Figure 12: Plastic ingestion and bioaccumulation along the food chain
(Surfers Against Sewage, 2014).
Besides polymers, plastics usually contains a wide range of other substances or additives. Some
of the additives raises concerns as to their effects on human health due to long-term exposure
or higher concentrations. The chemical elements’ adverse effects includes various forms of
32
cancer, mutations in organisms (defections), or endocrine disruptions that mimics hormones in
the body and can cause e.g. cognitive development disorders, diabetes and/or obesity (Surfers
Against Sewage, 2014; World Economic Forum et al., 2016). The paper products manufactured
by BillerudKorsnäs is no way near of imposing the same kinds of threats as plastic products,
since being organic and biodegradable materials (Haag, 2017). However, some products might
contain additives and therefore it has been decided to include a qualitative assessment of some
indirect cost incurred by paper bags.
33
7 Results - Cost of Externalities
In this section the calculations of the economic impact of the packaging industry is presented.
The calculations have been carried out by using academic literature, interviews with industry
professionals and using benchmark data.
7.1 Cost of CO2 Impact
The cost of GHG pollution illustrates the cost necessary to compensate for the pollution
emitted during the production, transport and up to final consumption. For the CO2e emitted
during the production and transportation the data from the IVL reports is used. Since the
reports only presented the CO2 impact per bag, no country total will be presented. The
quantification, or monetization, of the environmental cost has been based upon the normative
CO2 price estimations made by the World Bank as well as Moore & Diaz (2015). In figures
13 and 14, the price scenarios of the World Bank is noted by WB1-2 (80/tCO2e - 120/tCO2e)
and Moore and Diaz by M&D (220/tCO2e).
7.1.1 Cost of CO2 Impact Indonesia
The results from applying the CO2 pricing models of the World bank and Moore and Diaz
(2015) upon plastic and paper bags with final use in Indonesia is outlined below:
Figure 13: Cost of CO2 per bag in Indonesia according different pricing models
As is visible in figure 13 the overall impact from both plastic and paper bags is higher in
Indonesia. This is firstly because Indonesia has a higher share of fossil fuels in its energy
mix. Secondly, the material production is assumed to take place in Europe giving higher
transportation costs. However, when looking at the figure 13 and 14 this does not have enough
34
impact to put both products on the same level as material production still has the largest
impact. The difference in cost between plastic bags and paper bag ranges from ce 0.2 to ce
0.8, depending on which CO2 price is used.
7.1.2 Cost of CO2-impact U.K.
The results from applying the CO2 pricing models of the World bank (2016) and Moore and
Diaz (2015) upon plastic and paper bags with final use in the U.K. is outlined below:
Figure 14: Cost of CO2 per bag in the U.K. according to different pricing models
As is portrayed in figure 14 paper bags have on the whole a significantly less damaging impact
to the environment and are therefore less costly than plastic bags in the case of U.K. The paper
alternative is approximately ce 0.2 - 0.8 cheaper in regard to the aggregated value of each step
of the value chain. The main advantage of the paper products is the material production
process where they are responsible for less CO2-equivalents. This is true both for the case
of the BillerudKorsnäs bag and the recycled paper bag, which both emit less CO2 in their
production stages. In material production the paper products are consequently approximately
ce 0.3 - 0.9 cheaper than the plastic alternative per unit. Also noticeable is that the plastic
products perform somewhat better than paper bags during transportation. As previously
stated, this is due to the lighter weight as well as the ability to be packed more tightly (World
Economic Forum et al., 2016). However, Dahlgren and Stripple (2016) argues that, although
these advantages of plastics are favorable, they are negligible in such short distances and fail
to decidedly impact the overall environmental pollution.
7.2 Impact on Fishing Industry
The cost estimation of the fishing industry has been based on mainly two studies conducted
by Lee (2015) and Mouat et al. (2010). Both authors have estimated the annual cost of
35
damage incurred by marine debris to the fishing industry. The results presented by them
have been supplemented with data used from Allsopp et al., (2006); McIlgorm et al. (2008);
UNEP (2014) regarding plastic bag concentration in the sea and lastly Marine Management
Organisation (2015) for statistics regarding the sizes of the fishing industry in United Kingdom
and Indonesia. The results from the low, average and high cost scenarios used for respective
country are presented below.
7.2.1 Fishing Industry Indonesia
In Indonesia the cost ranges from ce 0.23-0.42 per bag between the lowest and highest cost
scenario, and an annual national cost between e 22-41 million. The fishing industry represents
3 % of the GDP in Indonesia and is therefore highly affected by littering.
Figure 15: Annual cost of damages incurred by plastic bags to the fishing industry in Indonesia
Figure 16: Cost per plastic bag sold in Indonesia to compensate fishing industry damages
36
7.2.2 Fishing Industry U.K.
The results indicate that the cost per bag for United Kingdom is in the low cost scenario ce
0.86 and the high cost scenario ce 1.33, with an annual national cost between e 8.6 - 13.3
million.
Figure 17: Annual cost of damages incurred by plastic bags to the fishing industry in U.K.
Figure 18: Cost per plastic bag sold in U.K. to compensate fishing industry damages
7.3 City Cleanup Cost
The City Cleanup cost for Jakarta and London is used to give and indication of the cost of
plastic and paper bags impose on cities. The estimation are based upon Monroe et al. (2013)
cleanup cost investigation of Californian cities and their estimates of how much of that was
directly related to plastic bags. To find the cost imposed by paper bags, the sales data for each
37
product was compared and used as a basis for the calculations. Paper bags were not singled
out by Monroe et al. (2013) but would reasonably contribute to the city cleanup costs.
7.3.1 City Cleanup Jakarta
The total estimated Cleanup costs for Jakarta are presented below:
Figure 19: City cleanup cost of plastic and paper bags in Jakarta
In figure 19 the annual city cleanup cost for Jakarta is displayed. The high cost scenario yields
a cleanup cost for Jakarta of approximately e 15 - 19 million per year.
If the cleanup cost of plastic bags to the city of Jakarta were to be distributed onto every sold
plastic bag the following result would be achieved:
Figure 20: City cleanup cost per sold bag Indonesia
38
7.3.2 City Cleanup London
For the city of London the following results were achieved for the annual cleanup cost:
Figure 21: City cleanup cost of plastic and paper bags in London
For the city cleanup of London the cost per plastic bag would have the following results:
Figure 22: City cleanup cost per sold bag United Kingdom
39
7.4 Beach Cleanup Cost
The beach cleanup cost aims to include the cost of cleaning up plastic bags that ends up
on beaches and coastal areas. The calculations are based on the total leakage from each of
the case countries respectively. For the APEC region, the results and estimations of cost for
beach cleanup was specifically adjusted for Indonesia. For the U.K. there existed regional and
national estimates of the beach cleanup cost incurred by marine debris. The result from these
studies have therefore been used or adjusted to include the entirety of the U.K.
The beach cleanup externality is analyzed as something that is imposed on society as a whole
regardless if the affected country engages in the costly business of actually picking up the litter
or not.
7.4.1 Beach Cleanup Cost Indonesia
The beach cleanup cost of Indonesia was based upon the results for the International Coastal
Cleanup day and on the ocean debris leakage from Indonesia. This, to illustrate the cost they
impose on other Asia-Pacific economies with their plastic pollution.
The cleanup cost estimated by McIlgorm et al. (2008) was originally based on the cost per
tons, however, when using weight units for marine leakage, it gives a false cost estimation due
to the weight of items picked up. For example, the cost of picking up one plastic item weighing
1 kilogram on a beach is less than picking up 53 candy wrapper weighing 19 grams each on
the same beach. Therefore, the findings on the International Coastal Cleanup day in 2007, a
”standard” item, weighing 0,38 kg has been used as a basis instead. The cost per item was
calculated as follows:
Table 3: Results from the International Coastal Cleanup Day in 2007 in the APEC region
(McIlgorm et al. 2008)
From the calcuations portrayed in table 3 the average cost of item pickup varies between e
2.4-7.3 per 0.38 kilogram of items collected.
Out of the 0.5-1.3 million tons of plastic leakage originating from Indonesia every year (Jam-
beck, 2015; Havas Oegroseno, 2016), the cleanup cost for this according to the different wash
up scenarios and the different cost scenarios put forward by McIlgorm et al. (2008) the annual
cost for Indonesia due to picking up plastic bags on beaches would be e 26 - 79 million as
shown in figure 23.
40
Figure 23: Annual beach cleanup cost for plastic bags in Indonesia
Depending on how much of the plastic bag leakage that eventually will wash up on shore, the
cost to clean them up varies. Based on the yearly sales data of 9.8 billion plastic bags as of
2016 in Indonesia (The Jakarta Post, 2016), this would result in the following cost per plastic
ce 0.27 - 0.80 displayed in figure 24.
Figure 24: Beach cleanup cost per plastic bag sold in Indonesia
7.4.2 Beach Cleanup Cost U.K.
The beach cleanup cost for the U.K. was calculated similarly to Indonesia based on the same
cost for volunteers participating in the cleanup initiative. The average cost per item picked up
41
ranges from e 2.1-6.3 per item collected.
Table 4: Results from the Great British Beach Clean in 2016
Out of the 41 million pieces estimated to be along the British coastline, 1.1 % is plastic bags
(Marine Conservation Society, 2016), which means that plastic bags along coastlines costs e
0.7-1.6 million to clean up every year, as displayed in figure 25.
Figure 25: Annual beach cleanup cost for plastic bags in United Kingdom
Based on the annual sales of plastic bags in the UK of 1 billion bags as of 2016 (Smithers,
2016), the the final cost per bag ranges from ce 0.07-0.16, as seen in figure 26:
42
Figure 26: Beach cleanup cost per plastic bag sold in United Kingdom
7.5 Annual Direct Cost Comparison
Even though the externality costs are higher per plastic bag in United Kingdom compared
to Indonesia, the annual cost to respective economy has been calculated in order to show
that the economic impact is larger in Indonesia. The costs presented in table 5 includes the
annual costs for cleaning beaches, city cleanup costs of the capitals and damage incurred to
the fishing industry due to plastic bags. The results provides an indication of the magnitude
in a developed country compared to a less developed one and the annual costs are larger when
considering the indirect costs not included in the calculations.
Plastic bags incur a cost of e 50-124 million per year in Indonesia with an average calculated
cost of e 87 million, whilst the U.K. has a cost of e 14-30 million with an average cost esti-
mate of e 22 million. The costs for respective country have included purchasing power parity,
meaning that Indonesia is even further affected by the debris when speaking in magnitude of
negative impacts caused by the debris. With an average scenario comparing the two case coun-
tries e 22 million vs. e 87 million the impact induced on Indonesia due to plastic bag debris
is larger than fourfold as the cost suggests, after adjustments being made for the purchasing
power parity. The results are displayed in table 5 below.
Table 5: Total annual cost and per bag cost incurred by plastic bags
However, one should not forget that CO2-impact cost from the value chain is not included in
the annual cost. Moreover, the city cleanup cost is based only on the capital cities Jakarta and
43
London and the annual cost for the country is thus higher. The reason for only including the
capital cities is partially due to lack of data and time in order to encompass the country as a
whole, and partially due to the aim of getting a cost per bag impact rather than a national
annual cost for the city cleanup scenarios.
7.6 Cost Per Bag Comparison - Indonesia
In figure 27 below, the quantified externalities (direct costs) are displayed for Indonesia. The
costs for plastic bags ranges between ce 1.53-4.17 whilst the paper bags have an additional
cost of ce 0.55-1.54. The cost imposed on society by plastic bags is therefore at least threefold
compared to paper bags.
Figure 27: Aggregated societal cost per plastic and paper bag in Indonesia
7.7 Cost Per Bag Comparison - United Kingdom
In figure 28, the comparison of plastic and paper bags are displayed for United Kingdom. The
per bag societal costs for plastic bags ranges between ce 2.04-4.72 and for paper bags ce
0.50-1.41. In U.K. the cost is at least fourfold, and is probably larger when accounting for all
externalities bags impose on the economy.
44
Figure 28: Aggregated societal cost per plastic and paper bag in United Kingdom
45
8 Analysis - Internalization and Comparison
In this section the results laid out in the previous section will be further analyzed.
8.1 Quantified Externalities - Direct Costs
For the incurred costs that have been quantified in chapter 7 it is evident that plastic bags
have a significant societal cost, far higher than paper bags as shown in Figures 27 and 28. The
cost advantage paper has over plastic, is mainly due to the fact that it decomposes organically
and is derived from biobased and renewable feedstocks, not affecting wildlife, fishing industry,
coastal areas etc. to the same extent. In the LCA-studies it is also possible to conclude that
fibre-based bags have a far lower CO2 impact than plastic and therefore a lower economic cost
due to pollution.
For the quantifiable economic effects of plastic and paper bags there is a clear negative spillover
economic effect placed upon third parties such as municipalities, governments, the agricultural
industry, the tourism industry, the fishing industry, marine wildlife, citizens in general, and the
environment as a whole. However to put this in perspective and illustrate the competitive cost
situation between the two bag solutions, the externalities described in 8.1 are added to the the
generic purchasing price of 4ce and 8ce for plastic and paper respectively. These costs are
added to the purchasing price of each respective product using the method of internalization
described in section 4.2. The results achieved for the Indonesia and United Kingdom are
presented respectively below.
Figure 29: Aggregated cost per plastic and paper bag in Indonesia, including purchasing price
The results in Figure 29 show that the costs are the following in the low, average, and high
cost scenarios in the U.K. (plastic being presented first, followed by paper):
• Low: ce 5.5 vs ce 8.5
• Average: ce 6.8 vs ce 9.0
• High: ce 8.2 vs ce 9.5
46
Figure 30: Aggregated cost per plastic and paper bag in United Kingdom, including purchasing
price
The results in Figure 30 show that the costs are the following in the low, average, and high
cost scenarios in Indonesia (plastic being presented first, followed by paper):
• Low: ce 6.0 vs ce 8.5
• Average: ce 7.3 vs ce 8.9
• High: ce 8.7 vs ce 9.4
When calculating the total cost, including externalities in the purchasing price, the two ma-
terials are priced more equally than when just accounting for purchasing price. This is true
both in the case of Indonesia as well as in the U.K. However, plastic still holds a slight full
cost advantage in these cases. Therefore, it should be noted that in addition to the externali-
ties included in the figures above, four other aspects have been identified as also affecting the
outcome. These are included in the following section.
8.2 Including Other Externalitites - Indirect Costs
The additional costs identified in the study, are referred to as the indirect costs. These are
not as easily quantified, since the direct impacts are harder to determine. However, they do
have an indirect impact in one way or another, which makes them inevitable to exclude in
the total cost comparison. In the reports reviewed in this study, plastics are overwhelmingly
the main denominator of concern, whereas paper materials have little to no impact upon third
parties. This means that the total cost displayed in all three of the low, average and high
cost scenarios have even more hidden costs that are yet to be quantified and explored more
thoroughly on a societal level. For example it is not yet known what happens to a majority of
all the plastic materials leaking into the oceans, nor the exact implication of plastics ingested
by humans.
In this study the additional externalities have been identified as: Agriculture, Wildlife, Human
health concerns, and Tourism industry. There is most likely more areas and industries that
are affected indirectly, but these four have frequently been brought up in literature reviewed
as being affected the packaging industry.
Figure 31 aims to include these aspects, when accounting for all identified externalities based
upon three scenarios. It should be noted that the hidden costs added do not represent a precise
cost of what these aspects might impose, and should therefore be assessed with a certain degree
47
of moderation. The additional indirect costs serve as a visualization for the economic losses
imposed by the aspects that have not been quantified in this report. The graph below is
intended to provide a visual representation of what the additional externalities might be, thus
being faded. In order to retain objectivity, it is assumed that the paper materials also incur
negative cost effects to e.g. the tourism industry, by being an aesthetic burden when ending
up as waste. However, there are no indications that the materials have an impact on wildlife or
human health when consumed, since the material is organic, posing no real threat to wildlife
or human health when ingested.
Figure 31: Estimated societal cost for plastic and paper bags
When including the hidden cost of plastic it is evident that plastic industry have a devastatingly
higher societal cost than paper bags, than already revealed in the previous section. Literature
confirms this, but estimating the real costs of the externalities is yet to be done and needs
more thorough investigation.
48
Figure 32: Estimated full cost for plastic and paper bags
For the estimated full cost, including the purchasing price and the externalities mapped in
this thesis, paper bags outperform its plastic counterpart in both the average and high cost
scenario whilst being similar in the low cost scenario. With reservation, the full cost is most
likely to be even higher for plastic bags but needs more thorough investigation for a definitive
confirmation of the hypothesis.
49
9 Discussion
This section will discuss the insights gained from the literature review, results, and analysis: It
will outline the prerequisites of the packaging industry from a general point of view and from a
circular economy perspective
9.1 The Packaging Industry’s Circumstances and Future Prospects
Analyzing the packaging industry from the circular economy perspective provides insights to
the issue which has resulted in arguably, the worst environmental disaster to date. In its
essence the case of single-use plastic packaging is the failure of actors involved in the value
chain to realize the cost that the packaging industry imposes on others. By not including the
cost of externalities, companies using plastic packaging materials are exposing themselves to
significant market risks as well as missed opportunities. This is because the aggregated cost
of plastic materials are, according to our calculations, vastly under-priced. By calculating and
estimating the direct and indirect costs discarded plastic bags impose on society, it is revealed
that the externalities, according to our study, are two to three times higher than the initial
purchasing price. If this insight would be realized and be borne by the brandowners, a more
concrete and fair comparison of plastic and paper bags would be assessed before choosing
packaging material.
After internalizing the cost of externalities onto the two bag solutions, it is realized that the cost
situation of which is the least costly material changes radically. The issues coupled to single-use
plastic packaging will most likely increase in the near future, due to the low recyclability and
increasing consumption of consumer goods worldwide. The reason for the low recycling rate is
firstly that plastic packaging is relatively expensive to recycle. This means that an economic
disincentive exists to collect and recycle the sold plastic materials. Furthermore there is a
paradoxical situation between the light-weight innovations applied on plastic materials. Plastic
materials have decreased its weight over the last decades and this manufacturing innovation
still has a great impact on the industry, providing material savings in production and usage.
However, there is a tension existing since the after-use value decreases when the plastic material
have lower content (World Economic Forum, 2016). The same arguments could be put forward
to paper packaging, however, when discarded it would result in an even faster biodegradation
but could on the other hand lower the incentives of attaining a circular business model.
Even though efforts are being taken against reducing plastic packaging use, the transition is
moving too slowly if ecosystem degradation, environmental concerns and health issues are to
be evaded. Achieving radical reductions require large-scale coordinated efforts along three
main dimensions: 1) improving the infrastructure for after-use purposes in less developed and
high-leaking regions (increase the recovering rate) 2) Strengthen the incentives of recycling,
reusing and keeping the materials within the system boundaries (i.e. adapting the circular
economy) 3) reducing the dependency of plastic materials and steer innovation towards truly
renewable and biodegradable materials (e.g. paper packaging) (Van Sebille et al., 2016; World
Economic Forum et al., 2016).
However, even then, the best case scenarios predict that a 45 % decrease by 2025 of global
plastic leakage would only stabilize the outflow, meaning that the total accumulated volume of
plastics would remain the same. A scenario of reducing the global leakage from the current 32
% to 1 % would still be equivalent to one million tons of plastic escaping the collection system
every year (World Economic Forum et al., 2016). Based on this information, it is argued
that even though substantial efforts are required to combat the negative externalities incurred
mainly by plastic materials, a transition towards renewable and biodegradable materials are
critical.
The societal costs in this report has had their baseline from the Sustainable Development Goals,
50
namely the following: Good Health and Well-being, Decent Work and Economic Growth,
Responsible Consumption and Production, Climate Action, Life Below Water, Life On Land.
It has been clear that the packaging industry is affecting each and one of the categories listed,
some more than others. This insight could help to provide policymakers on higher instances to
emphasize the issues related to linear production models and single-use products. If the goals
are to be achieved, reducing the impact from the packaging industry would mean substantial
gains on all three pillars of sustainability - economic, environmental, and social.
9.2 The Circular Economy Perspective
The circular economy provides many benefits for enterprises. These include radically limiting
risk, optimizing resource utilization and the ability to seize new opportunities. One of the key
risks for the packaging industry is the regulatory risk, i.e. the risk of new legislation banning
or adding taxes on certain materials. In recent years the continuous efforts of policymakers
to minimize and price the negative externalities have grown and the efforts are projected to
sustain (Ellen MacArthur, 2015). For example, the countries that have a carbon trading system
are increasing, as well as the annual number of climate change laws passed all over the world
(World Bank, 2016). This increasing risks of regulation is especially disruptive as it has the
potential to change the conditions of an industry without notice (Bauer et al., 2017). In this
context, the circular model of growth, decoupled from the consumption of finite resources and
capable of delivering resilient economic systems, is increasingly looked upon as the next wave
of development (Ellen MacArthur Foundation, 2015).
We argue that this demands new and increased attention regarding the impact one’s business
imposes upon the surrounding. For businesses using the circular economy framework, there
are arguably three costs, which affect the real cost of plastics in comparison to other packaging
material. The first and most obvious cost is the purchasing price, reflecting the price to
customers buying the plastic bags. The second price observed is the quantifiable price presented
in section 7. This cost illustrates the cost as a direct effect of pollution and production of the
different packaging materials. As previously described above, this put the costs of these two
packaging solutions at even levels. However, it is worth noting that the direct costs presented
in section 7 is all-covering nor exhaustive.
The third cost identified was the indirect costs where difficulties in quantifying the measures
occur. In section 8 these were illustrated as an added cost to the direct and purchasing
price. The indirect costs, have and will be difficult to quantify properly, thus having multiple
interpretations and a divergence of how large the costs might be. It should also be noted that
because they are unknown, they are further affected by the public perception of packaging
materials. This cost is also subject to discrepancies, since it is individual and depending on
education and relation to a product category. If one is aware of the problems associated with
plastic packaging and/or have a strong relation to sustainability, they might perceive plastic
materials as being far more costly than others. These variable costs have the potential to
radically change the business landscape for companies. Arguably, in the case of plastics, as the
public perceives the cost of plastic as higher, there will be more incentives for policymakers to
take a tougher stand against plastic packaging. Furthermore it could mean a risk for businesses
that use plastic packaging for their products if the incentives and/or perception costs exceed
the benefit that the material offers.
Assuming that plastic packaging will be too costly, realizing a paradigm shift towards truly
sustainable and biodegradable materials from a circular production perspective could make
incremental innovation and capital investments in plastic technology development superfluous
and irrelevant if alternative packaging materials will become the dominant design. For compa-
nies applying the circular economy mindset, it is essential to not only consider the costs that
are associated with the traditional production levels but to design the value chain by including
the entirety of costs in a life cycle analysis. This entails the cost of externalities; direct and
51
indirect, perception cost, and the cost associated with traditional decision-making.
9.2.1 Circular Model for Policymakers
As described above there is an inherent conflict between the decision making of companies and
the reluctance of policymakers to assign costs and curtail externalities. Admittedly, this is an
area that has grown in significance but is today arguably the area holding back the widespread
implementation of the circular economy. The reason for this is twofold. Firstly, there must exist
business incentives to apply a circular model concept. Secondly, without proper price signaling
it is not possible for companies to really understand the choices before them. With false price
signals it unknowingly, encourages them to use materials, or engage in activities, that are not in
accordance with a circular business model exposing themselves to market risks. The issue with
plastic pollution provides a grim example for what happens when price signals are lacking. It
is therefore possible to draw the conclusion that government price signaling must be objective,
quicker and more dynamically communicated to polluting companies. This new approach from
policymakers is essential for the circular economy concept to work as intended.
52
10 Conclusion
This chapter presents the conclusions drawn from the findings of the study and will outline
concise answers to the research questions, the contribution, limitations of the results and sug-
gestions on future research within the area.
10.1 Answering the Research Questions
The main area of investigation of this thesis has been to answer the following research ques-
tion:
MRQ:What insights can the packaging industry provide into the prerequisites of the success of
circular business models?
Based on our findings from the quantitative and qualitative study, the following insights have
been found:
• The real cost of packaging material in a circular economy perspective consist out of three
costs; Purchasing Costs, Direct Costs and Indirect Costs. Companies who engage in
circular models must take all of these costs under consideration when making strategic
and operational decision, or face increased risks and loss of resources
• In order for the circular economy to be properly implemented, there must exist accurate
or close to accurate price signals, otherwise companies could potentially choose inferior
pathways or technologies
• Companies engaging in the circular economy approach have the possibility to create
significant competitive advantages through increasing resource utilization and innovation
Two additional sub-questions have also been researched in this thesis, where the conclusions
drawn from the research conducted are presented below:
RQ1: How does the accumulated costs of plastic and paper bags compare in a developed (United
Kingdom) and less developed country (Indonesia)?
• The purchasing price ce 4 and ce 8 for plastic and paper bags respectively does not
reflect the full impact. By including end-of-life aspects the following estimates have been
concluded in a low, average, and high cost scenario:
Table 6: Total cost per bag and material type including direct costs
• The annual costs for each country are according to the average scenario approximately
four times larger in Indonesia than for the U.K. (e 87 million vs e 22 million)
53
• Due to an increasing middle-class in less developed regions in the future in combination
with lower infrastructure standards, the problems are most likely going to increase in the
future, if no interventions are implemented (tax levies, bans)
• The fishing industry is in absolute numbers affected similarly in the two countries. How-
ever, in relative terms, Indonesia experiences larger problems, but it is not as evident
since the PPP-adjustment lowers the total imposed cost for the industry
• Plastic bags found on along beaches and coastal areas are proven to be far lower in the
U.K. than for Indonesia (1.1 % vs 7.3 % of all items of debris collected) based on cleanup
initiatives’ waste collection data. The plastic bag waste thus impose a greater problem
for Indonesia
RQ2: What does an inclusion of end-of-life aspects for plastic and paper bags reveal about the
societal costs and the most cost-effective choice of material?
• The inclusion of end-of-life aspects reveal that there are significant societal costs and
that these have the potential to give a new perspective as to which material is the most
cost effective. Three main costs have been identified apart from the purchasing price:
– The quantitative aspects: The aspects that have been quantified and directly applied
to the purchasing price per bag
– The qualitative aspects: The aspects that have been assessed but not calculated.
These needs more research in order to determine their socio-economic impact and
magnitude
– The perception cost: This cost is individual and cannot be generically applied to a
per bag cost. An individual’s perception of a product type or material is complex
and rather indecisive since the number of underlying reasons may differ as to why
one determines a material as not being a viable option. This cost may prove decisive
• When excluding the purchasing price from the equation, the societal costs incurred by
plastic materials are two to three times larger than those incurred by paper bags when
accounting for the quantified aspects
• However, the quantitative comparison does not reveal the full picture of the actual cost
of the packaging material types
• When assessing the additional qualitative aspects, not included in the calculations, the
comparison will most likely favour for paper bags as the most cost-effective choice
• The aspects that have not been quantified in this report needs further investigation in
regard to their magnitude and societal, economic, and environmental impact in order to
draw determinant conclusions of the most cost-effective choice of material
10.2 Academic Contribution
This study has provided better insights to what extent two product types, plastic and paper
bags, within the packaging industry might have. Furthermore, the study has applied the costs
on two case countries, Indonesia and United Kingdom, giving insights that developing coastal
regions will suffer more from the societal costs due to poor recycling systems and incentives,
lower educational level and a higher dependency of maritime industries and activities.
This study also provided better insight into research gaps within the circular economy model
especially those related to business decisions within organizations. Since the circular economy
means new production models, companies need to structure their decision making to consider
the different aspects.
54
Finally, the thesis has revealed the complexity of both mapping and aggregating externalities
onto material types with certainty. The system boundaries and the dynamic nature of marine
debris and the mapping of plastic materials makes it difficult to assess all identified externalities
quantitatively.
10.3 Industry Contribution
Our research has provided insights on the cost-comparison of plastics for packaging purposes
and fibre-based alternatives, as well as a more concrete understanding of the cost from a holistic
point of view. As stated in previous sections, there is no thorough comparison of the price that
a retailer pays and the actual cost when accounting for environmental impacts for packaging
products. Thus, this thesis has provided an indication of how large these costs related to
packaging materials might be.
It is worth noting that there are existing reports that has determined the environmental impact
of plastic bags and paper bags, however these studies tend to be heavily focused on linear
production models that have non-existing to little regard to the end-of-life aspects, as well
as total environmental impact over the product’s lifetime (Muthu et al, 2012). Moreover,
an accumulation of the total costs with the add-on of externalities connected to packaging
materials have not previously been done.
Governments and lawmakers around the globe are aware of the externalities and environmental
and have in some cases put a fix tax on plastic bags, but this tax have no precise foundation
in the cost of environmental impact. The taxes and bans are thought more of as incentive
programs in order to reduce the usage of plastic packaging and the environmental problems
associated with it (Dikgang et al., 2012). The expectation is therefore that an academic
perspective based on an empirical quantitative study supported by qualitative aspects can
strengthen the claims and incentive programs that exist today and push more countries into
implementing similar programs of their own. Policymakers could benefit from more calculations
and estimations like this report and strengthen the arguments of implementing taxes, levies or
bans instead of having an approach where the levies are based on guesstimations.
10.4 Limitations
It is important to mention that the cost estimates found in this study is by no means extensive
nor exhaustive. The excessive difficulty with adding a price or cost to any activity or product
is that there are many approaches and methodological approaches to do so. It is for example
possible to base the calculations on the cost of cleaning up all plastics or simply to compen-
sate for the actual damages. This of course dismisses aesthetic aspects which are themselves
extensively difficult to value in monetary terms. To make matters more complicated the cited
studies consistently use different approaches to estimate the cost.
Furthermore, the methodological approach in this study has been rather static, for a subject
that is highly complex and dynamic. The numbers used for the calculations are based on
different years for different parts. For example the 5p plastic bag charge introduced in the
U.K. reduced plastic bag consumption by 80 % in the first year. This changes the final results
for the cost per bag drastically, using the methodological approach in this study. This is why
low, average and high cost scenarios has been applied in the calculations, in order to retain
validity and reliability of the output.
55
10.5 Future Research
10.5.1 Externalities
The calculations made in this study needs revising and a more strict and methodological
approach. The difficulty is to find congruent and up-to-date data and to validate the credibility
of the sources utilized, since the most part of the calculations are made from non-governmental
organizations that could have a certain agenda when presenting results. Furthermore, wider
case studies of specifically coastal regions needs to be investigated more, in order to confirm
the magnitude of the societal costs.
There needs to be more thorough investigations into the socio-economic indirect costs that
this report has identified to determine the effect of all externalities. These include harm to
wildlife, human health concerns, damage to agriculture, and tourism industry. Furthermore,
the perception cost could be an area of investigation as to how end-consumers perceive the
different materials both when excluding and including societal costs. Businesses’ perceptions
of the choice of packaging material when accounting for externalities could be interesting to
investigate in regards to public image, and environmental and societal responsibility.
Furthermore, other end-of-life aspects than leakage to the ocean and on land should be ad-
dressed within a linear and circular value chain perspective. The linear consumption could
lead to open-burning, which in turn would release toxicants that are harmful both to the
environment and to human beings when inhaled.
A cost comparison of biobased and biodegradable plastic materials is also an area of investi-
gation. The technologies of biobased plastics is still relatively new, but could mean a decrease
in after-use societal costs. Research regarding the carbon footprint induced by biobased and
biodegradable plastics also needs more assessments, in order to better evaluate the material in
a total cost comparison of conventional plastics and paper products.
10.5.2 The Circular Model
For the circular model, several areas in need of further exploration have been discovered.
Firstly there is a need to further develop what the system boundaries for companies acting in
a circular model are or what they should be. Secondly there is a need to further develop and
explore what strategies companies should or can use to navigate within the circular economy
model. Thirdly, it is also necessary to further explore what other factors that have arisen or
changed, with respect to the linear production model. Fourth, it is also viewed as imperative
that policymakers take a more active role to communicate the correct costs of materials and ac-
tivities. This also necessitates more exploration as to the governments role and responsibilities
in regards to the circular economy. The research area of system boundaries is considered to be
especially important as it will be necessary for policymakers to communicate the real costs of
activities and materials to companies. Lastly, an investigation to what extent paper packaging
could overtake the industry in terms of supply as well as the applicability and possibility of
paper packaging becoming the main packaging material within circular production models is
an intriguing opportunity that needs further assessment.
56
11 References
AHLERSTEN, K. 2006. Lär lätt! Mikroekonomi - Kompendium. Studentia.

ALBRECHT, J., 2006. The use of consumption taxes to re-launch green tax reforms. Inter-
national Review of Law and Economics, 26(1), pp. 88-103.
ALLSOPP, M., WALTERS, A. SANTILLO, D., JOHNSTON, P. 2006. Plastic Debris in the
World’s Oceans. Greenpeace International.
ANDERSEN, M. S. 2007. An introductory note on the environmental economics of the circular
economy. Sustainability Science, Vol. 2, Issue 1, 133-140.
ÁLVAREZ-CHÁVEZ, C. R., EDWARDS, S., MOURE-ERASO, R., GEISER, K. 2011. Sus-
tainability of bio-based plastics: general comparative analysis and recommendations for im-
provement. Cleaner Production, 23, 47-56.
AVIO, C. G., GORBI, S. & REGOLI, F. 2016. Plastics and microplastics in the oceans: From
emerging pollutants to emerged threat. Marine Environmental Research, 1-10.
BARNES, D. K., GALGANI, F., THOMPSON, R. C., BARLAZ, M. (2009). Accumulation
and fragmentation of plastic debris in global environments. Philosophical Transactions of the
Royal Society of London B: Biological Sciences, 364(1526), 1985-1998.
Bauer, T. K., Braun, S. T., Kvasnicka, M. (2017). Nuclear power plant closures and local
housing values: Evidence from Fukushima and the German housing market. Journal of Urban
Economics, 99, 94-106. Chicago
BLOMKVIST, P. & HALLIN, A. 2015. Method for engineering students - Degree projects
using the 4-phase model. First ed. Lund, Sweden: Studentlitteratur AB.
BOYCE, P. & PALMER, J. 2015. The Future of Global Packaging to 2020. Smithers Pira,
United Kingdom.
BRITISH GOVERNMENT 2016. Policy paper - Carrier bags: why there’s a charge. Depart-
ment for Environment, Food Rural Affairs.
CEA 2016. Indonesia Fisheries: 2015 Review. California Environmental Associates.
COLLIS, J. & HUSSEY, R. 2003. Business Research: A Practical Guide for Undergraduate
and Postgraduate Students. Palgrave Macmillan, United Kingdom.
COZAR, A., ECHEVARRIA, F., GONZALEZ-GORDILLO, J. I., IRIGOIEN, X., UBEDA, B.,
HERNANDEZ-LEON, S., PALMA, A. T., NAVARRO, S., GARCIA-DE-LOMAS, J., RUIZ,
A., FERNANDEZ-DE-PUELLES, M. L. & DUARTE, C. M. 2014. Plastic debris in the open
ocean. Proceedings of the National Academy of Sciences of the United States of America, 111,
10239-10244.
DAHLGREN, L. & STRIPPLE, H. 2016. A comparative LCA study of various concepts for
shopping bags and cement sacks. Stockholm, Sweden: IVL Swedish Environmental Research
Institute Ltd.
DAHLGREN, L., STRIPPLE, H. & OLIVEIRA, F. 2015. Life cycle assessment - Comparative
study of virgin fibre based packaging products with competing plastic materials. Stockholm,
Sweden: IVL Swedish Environmental Research Institute Ltd.
DIKGANG, J., LEIMAN, A. & VISSER, M. 2012. Analysis of the plastic-bag levy in South
Africa. Resources, Conservation and Recycling, 66, 59-65.
EIA 1995. Electricity Generation and Environmental Externalities: Case Studies.Washington,
Diane Publishing.
57
ELLEN MACARTHUR FOUNDATION 2015. Towards a Circular Economy: Business ratio-
nale for an accelerated transition.
Ellerman, A. D., Joskow, P. L. (2008). The European Union’s emissions trading system in
perspective. Arlington, VA: Pew Center on Global Climate Change.
ERIKSEN, M., LEBRETON, L. C. M., CARSON, H. S., THIEL, M., MOORE, C. J., BOR-
ERRO, J. C., GALGANI, F., RYAN, P. G. & REISSER, J. 2014. Plastic Pollution in the
World’s Oceans: More than 5 Trillion Plastic Pieces Weighing over 250,000 Tons Afloat at Sea.
Plos One, 9, 15.
ESSÉN, H. 2016. Sustainability is our business. Climate Change - The New Economy. Down-
loaded 2017-04-11. http://climatechange-theneweconomy.com/sustainable-packaging/
ESPOSITO, M., TSE, T. & SOUFANI, K. 2017. Is the Circular Economy a New Fast-
Expanding Market? Thunderbird International Business Review, 59, 9-14.
EUNOMIA 2016. Plastics in the Marine Environment. Eunomia Research Consulting Ltd,
Bristol, United Kingdom.
EURACTIV 2014. Campaign highlights biodiversity cost of plastic bags. EURACTIVE.com.
Downloaded 2017-05-03 https://www.euractiv.com/section/sustainable-dev/news/campaign-
highlights-biodiversity-cost-of-plastic-bags/
EUROPEAN COMMISSION 2014. European Maritime and Fisheries Fund (EMFF): United
Kingdom - overview. Maritime affairs and Fisheries
EUROPEAN PARLIAMENT & COUNCIL OF THE EUROPEAN UNION, C. O. T. E. 2015.
Amending Directive 94/62/EC as regards reducing the consumption of lightweight plastic
carrier bags.
FOOD AND AGRICULTURE ORGANIZATION (FAO) OF THE UNITED NATIONS 2014.
Fishery and Aquaculture Country Profiles - The Republic of Indonesia. Downloaded 2017-05-
03 http://www.fao.org/fishery/facp/IDN/en
FLORES, M. C. 2008. Plastic Materials and Environmental Externalities: Structural Causes
and Corrective Policy. Lethbridge Undergraduate Research Journal.
GLOBALDATA INTELLIGENCE CENTER 2015. Jakarta and London Profile.
GOLD, M., MIKA, K., HOROWITZ, C., HERZOG, M. & LEITNER, L. 2013. Stemming the
Tide of Plastics Marine Litter: A Global Action Agenda. Emmet Center on Climate Change
and the Environment, UCLA, policy brief No. 5.
GOMEZ, E. F. & MICHEL, F. C. 2013. Biodegradability of conventional and bio-based plas-
tics and natural fiber composites during composting, anaerobic digestion and long-term soil
incubation. Polymer Degradation and Stability, 98, 2583-2591.
GREGORY, M. R. 2009. Environmental implications of plastic debris in marine settings-
entanglement, ingestion, smothering, hangers-on, hitch-hiking and alien invasions. Philosoph-
ical Transactions of the Royal Society B-Biological Sciences, 364, 2013-2025.
HAVAS OEGROSENO, A. 2016. Marine Debris, Plastics and Microplastics: Indonesian Ex-
perience. UN Open-ended Informal Consultative Process on Oceans and the Law of the Sea -
New York.
MCCONELL, BRUE FLYNN. 2017 Economics (McConnell), 18th Edition Chapter 16: Public
Goods, Externalities, and Information Asymmetries.McGraw-Hill Global Education Holdings,
LLC.
HYMAN, D. N. 2014. Public finance: A contemporary application of theory to policy. Cengage
Learning.
58
INABA, A. 2013. From Carbon to Environment, From Product to Organization. Presen-
tation at International Workshop for Scope 3 Standard and LCA for Organization. Mizuho
Information & Research Institute, Inc. Tokyo, Japan.
JAKARTA POST, 2016. Minimum plastic bag tax set at negligible Rp 200. Downloaded
2017-05-10. http://www.thejakartapost.com/news/2016/02/22/minimum-plastic-bag-tax-set-
negligible-rp-200.html
JAMBECK, J. R., GEYER, R., WILCOX, C., SIEGLER, T. R., PERRYMAN, M., AN-
DRADY, A., NARAYAN, R., LAVENDER LAW, K. 2015. Plastic waste inputs from land
into the ocean. Marine Pollution, Vol. 347, Issue 6223, 768-771.
KARAKAYA, E. 2016. Case Study Research - Lecture. KTH, Royal Institute of Technology,
Stockholm, Sweden.
LEE, J. 2015. Economic valuation of marine litter and microplastic pollution in the marine
environment: An initial assessment of the case of the United Kingdom. Centre for Financial
Management Studies, DP126. University of London, United Kingdom.
MARINE MANAGEMENT ORGANISATION, 2015. UK Sea Fisheries Statistics 2015. 9
Millbank, London, United Kingdom.
MARINE CONSERVATION SOCIETY 2016. Great British Beach Clean - 2016 report. 531-
2016.
MARINE SOCIO-ECONOMICS PROJECT (MSEP) 2014. How important is fishing to the
UK economy?. New Economics Foundation
MCILGORM, A., CAMPBELL, H. F. & RULE, M. J. 2008. Understanding the economic
benefits and costs of controlling marine debris in the APEC region. APEC and UNEP.
MCILGORM, A., CAMPBELL, H. F. & RULE, M. J. 2011. The economic cost and control
of marine debris damage in the Asia-Pacific region. Ocean & Coastal Management, 54, 643-
651.
MONROE, L., HEALY STICKEL, B., JAHN, A. & KIER, B. 2013. Waste in our water: The
annual cost to California communities of reducing litter that pollutes our waterways. Natural
Resources Defense Council (NRDC). Kier Associates, San Rafael California.
MOORE, F. C. & DIAZ, D. B. 2015. Temperature impacts on economic growth warrant
stringent mitigation policy. Nature Climate Change, Vol. 5, Issue 2, 127-131.
MOUAT, J., LOPEZ LOZANO, R. & BATESON, H. 2010. Economic impacts of marine litter.
Kommunernes Internationale Miljøorganisation, KIMO.
MURRAY, A., SKENE, K. & HAYNES, L. 2015. The Circular Economy: An Interdisciplinary
Exploration of the Concept and Application in a Global Context. Journal of Business Ethics,
140, 369-380.
MUTHU, S. S., LI, Y., HU, J. Y., MOK, P. Y. & DING, X. M. 2012. Eco-Impact of Plastic
and Paper Shopping Bags. Journal of Engineered Fibers and Fabrics, 7, 26-37.
MUTHU, S.S., LI, Y., HU, J.Y. and MOK, P.Y., 2011. Carbon footprint of shopping (grocery)
bags in China, Hong Kong and India. Atmospheric Environment, 45(2), 469-475.
NEIL-BOSS, N. & BROOKS, K. 2013. Unwrapping the packaging industry - Seven factors for
success. EY.
NEW-INNONET 2016. Analysis of the plastic packaging value chain.
NEWMAN, S., WATKINS, E., FARMER, A., TEN BRINK, P. & SCHWEITZER, J. P. 2015.
Marine Anthropogenic Litter - Chapter 14 The Economics of Marine Litter. Springer Interna-
tional Publishing, pp. 367-394.
59
NGUYEN, T. L. T., LARATTE, B., GUILLAUME, B. & HUA, A. 2016. Quantifying environ-
mental externalities with a view to internalizing them in the price of products, using different
monetization models. Resources Conservation and Recycling, 109, 13-23.
OCEAN CONSERVANCY & MCKINSEY & COMPANY 2015. Stemming the Tide: Land-
based strategies for a plastic-free ocean.
PORTER, M. E. & VAN DER LINDE, C. 1995. Green and competitive - Ending the stalemate.
Harvard Business Review, 73, 120-134.
PRUD’HOMME, R. 2001. Marginal Social Cost Pricing in Transport Policy. In Discussion
Paper Presented at the 7th ACEA SAG Meeting on “Marginal Social Cost Pricing in Transport
Policy”. Brussels, 18 September.
RASIEL, E. M. 1999. The McKinsey Way. McGraw-Hill, New York.
SALARY EXPLORER. Salary Survey in Indonesia, Gardening/Farming/Fishing. Downloaded
2017-05-03: http://www.salaryexplorer.com/salary-survey.php?loc=101loctype=1
SCIENCE LEARNING HUB 2008. Measuring biodegradability. Downloaded 2017-04-10
https://www.sciencelearn.org.nz/resources/1543-measuring-biodegradability.
SMITHERS, R. 2016. England’s plastic bag usage drops 85 % since 5p charge introduced. Con-
sumer affairs correspondent, The Guardian. Downloaded 2017-05-10 https://www.theguardian.com
/environment/2016/jul/30/england-plastic-bag-usage-drops-85-per-cent-since-5p-charged-introduced
SOLIWODA, M. & PAWLOWSKA-TYSZKO, J. 2015. Tax policy tools vs. sustainable de-
velopment of agriculture. The case of Poland (No. 2604481). International Institute of Social
and Economic Sciences.
SURFERS AGAINST SEWAGE 2014. Marine Litter Report: 2014-2020 Vision. St. Agnes,
Cornwall, United Kingdom.
SUSTAINABLE PACKAGING COALITION 2009. Environmental Technical Briefs of Com-
mon Packaging Materials: Fiber-Based Materials. Charlottesville, VA, USA.
TEUTEN, E.L., ROWLAND, S.J., GALLOWAY, T.S. & THOMPSON, R.C. 2007. Potential
for plastics to transport hydrophobic contaminants. Environmental Science & Technology, 41,
7759-7764.
TEUTEN, E.L., SAQUING, J.M., KNAPPE, D.R.U., BARLAZ, M.A., JONSSON, S., BJÖRN,
A., ROWLAND, S.J., THOMPSON, R.C., GALLOWAY, T.S., PRUDENTE, M., BOONYA-
TUMANOND, R., ZAKARIA, M.P., AKKHAVONG, K., OGATA, Y., HIRAI, H., IWASA, S.,
MIZUKAWA, K., HAGINO, Y., IMAMURA, A., SAHA, M., TAKADA, H. 2009. Transport
and release of chemicals from plastics to the environment and to wildlife. Phil. Trans. R. Soc.
B Biol. Sci. 364, 2027-2045.
THOMPSON, R. C., MOORE, C. J., VOM SAAL, F. S. & SWAN, S. H. 2009. Plastics, the en-
vironment and human health: current consensus and future trends. Philosophical Transactions
of the Royal Society B-Biological Sciences, 364, 2153-2166.
TUKKER, A. 2013. Product Services for a resource-efficient and circular economy - a review.
Journal of Cleaner Production, 97, 76-91.
UNITED NATIONS ENVIRONMENT PROGRAMME (UNEP), 2014. Valuing Plastics: The
Business Case for Measuring, Managing and Disclosing Plastic Use in the Consumer Goods
Industry.
UNITED NATIONS (UN) 2015. Sustainable Development Goals - 17 goals to transform
our world. Downloaded 2017-03-20 http://www.un.org/sustainabledevelopment/sustainable-
development-goals/
60
VAN SEBILLE, E., ENGLAND, M.H. & FROYLAND, G. 2012. Origin, dynamics and evolu-
tion of ocean garbage patches from observed surface drifters. Environmental Research Letters,
7(4), p.044040. Vancouver
VAN SEBILLE, E., SPATHI, C. & GILBERT, A. 2016. The ocean plastic pollution chal-
lenge: towards solutions in the UK. Graham Institute, Briefing paper No. 19, Imperial College
London.
WINANS, K., KENDALL, A. & DENG, H. 2017. The history and current applications of the
circular economy concept. Renewable & Sustainable Energy Reviews, 68, 825-833.
WORLD BANK, ECOFYS & VIVID ECONOMICS 2016. State and trends of Carbon Pricing.
Washington DC, USA: World Bank Group.
WORLD ECONOMIC FORUM, ELLEN MACARTHUR FOUNDATION & MCKINSEY &
COMPANY 2016. The New Plastics Economy - Rethinking the future of plastics.
YIN, K. R. 2009. Case Study Research - Design and Methods. 4th ed. Applied social research
methods v. 5. SAGE Publications, Inc.
61
Appendices
Appendix A - Gantt-chart
Figure 33: Gantt Chart of Project
62
Appendix B - Interview Scheme
Pre-study:
2017-02-15, 13:00-14:30 (Introductory meeting) Jon Haag, Director Consumer Insights, Billerud-
Korsnäs AB
Louise Wohrne, Sustainability Developer, BillerudKorsnäs AB
Qualitative study:
2017-03-17, 13:00-14:00 (Telephone conference) Håkan Stripple, IVL Svenska Miljöinstitutet
2017-03-23 (E-mail conversation) Erik van Sebille, Oceanographer and Climate Scientist. As-
sociate Professor at Utrecht University’s Institute for Marine and Atmospheric Research
2017-04-10 (E-mail conversation) Arif Havas Oegroseno, Deputy Minister, Coordinating Min-
istry of Maritime Affairs Indonesia
Tutorial meetings:
KTH:
2017-01-24, 13:30-14:00 (Introductory meeting) Cali Nuur
2017-02-06, 10:00-10:30 (Feedback from thesis proposal) Cali Nuur
2017-02-17, 13:15-13:45 (General meeting and introduction to new supervisor) Cali Nuur,
Michael Novotny
2017-04-06 11:00-12:00 (Mid-term feedback) Michael Novotny
2017-05-08 (Review of Results, Analysis and Discussion) Michael Novotny
BillerudKorsnäs:
2017-03-07, 13:00-16:00 (Value chain and mapping of costs in society by packaging) Jon
Haag
2017-03-24, 09:00-12:00 (Creation of quantitative model) Jon Haag
2017-04-03, 13:00-16:00 (Case study: UK Indonesia) Jon Haag
2017-05-02 13:30-15:00 (Review of Results) Jon Haag, Daniel Badman - Director Sustainability
Public Affairs
63
Appendix C - Assumptions and Estimations for Quantitative Study
The assumptions made in the calculations are listed below:

Exchange rates
Different reports lists costs in different currencies. For this report it has been chosen to convert
all currencies to Euro (e). The exchange rates has been chosen from currency-converter.net
as of 2017-03-01.
1 EUR (e ) = 1.06 USD ($) = 0.85 GBP (£) = 14200 IDR (Indonesian Rupee)
Marine debris
• 60-80 % of global marine debris is plastic materials (Allsopp et al., 2006; McIlgorm, 2008;
UNEP, 2014). Assumed to be true for both U.K. Indonesia
• 40 % out of the plastic materials in the ocean are plastic bags (Euractiv, 2014).
• The numbers regarding what type of plastics that this fraction comprises of has been
taken from various estimations, one stating that 40 % of the plastic marine debris is
plastic bags for the U.K. (Euractiv, 2014).
• Plastic material are assumed to have a degradability that is infinite in the externality
calculations, since the decomposition rate for plastic bags is stated to be 400-500 years
(Science Learning Hub, 2008; Surfers Against Sewage, 2014; World Economic Forum et
al., 2016)
• The fibre-based solutions are assumed to biodegrade up to a maximum of six months
(Science Learning Hub 2008; Haag, 2017). However, once leaked into the ocean it is
assumed that the material dissolves and do not damage wildlife or fishing vessels.
Beach Cleanup
The cleanup scenarios outlined for coastline/beach cleanup are based on two different extensive
cleanup initiatives conducted in the Asia-Pacific region and the U.K. respectively. The one
in the Asia-Pacific region was the “2007 International Coastal Cleanup day” (McIlgorm et
al., 2008), and the one conducted in U.K. was the “Great British Beach Clean” (Marine
Conservation Society, 2016).
• Volunteers working are assumed to have three different salary pays per day, outlining
three different cost scenarios.
• The salary per person and day are e 47, e 94, e 142 as proposed by McIlgorm et al.
(2008)
• Every volunteer is assumed to have equal pay per day, regardless of hours put down
• This leads to an average cost per item found by dividing the total value of labor with
the total number of debris collected.
• The average cost per item ranges between e 2.24 - 7.28 depending on salary and country.
• The cost per item is equivalent to the pay for picking up an item based on the cleanup
day initiatives
Indonesia
• 7.25 % of the total number of items collected were bags (McIlgorm et al., 2008), for this
scenario it is assumed that all of these are plastic bags
• The total waste produced in Indonesia were 150,000 tons per day in 2011 and 175,000
tons in 2014 (Havas Oegroseno, 2016).
64
• The annual leakage is calculated from Havas Oegroseno (2016) and it is further stated
that 14 % of the waste is plastics and that 7 % out of the waste leaks to the ocean, giving
an estimated 500,000 - 600,000 tons of plastic waste being leaked to the ocean annually
in Indonesia (Havas Oegroseno, 2016)
• The ocean leakage is validated by including Jambeck et al. (2015) estimation of 0.48 -
1.29 million tons being leaked in Indonesia annually and also Havas Oegroseno (2017)
claiming 1.3 million ton is leaked annually in the archipelago.
• Based on the average weight per item from the international cleanup initiative conducted
in the Asia-Pacific region in combination with the weight leaked into the ocean annually,
an estimated number of items are calculated (McIlgorm et al., 2008)
• Number of plastic bags sold in UK is set to 1 billion and in Indonesia 9.8 billion (Smithers,
2016; Jakarta Post, 2016)
UNEP (2014) scenario:
• UNEP (2014) estimated that 15 % of all the debris leaking into the ocean ends up floating
on the surface
• An estimation made by ourselves is that 50 % out of this waste ends up on beaches due
to flows and streams
• Based on the three cost scenarios on the salaries and pay per picked up item (McIlgorm
et al., 2008) an annual cost is calculated for all the plastic marine debris
• 7.25 % of all the plastic waste is considered to be plastic bags (McIlgorm et al., 2008)
• The total cost of plastic bags on beaches and coastlines are estimated to be 22-66 e
million/year for Indonesia
Eunomia (2016) scenario:
• 5 % of all the debris leaking into the ocean is estimated to end up on beaches (Eunomia,
2016).
• The calculations follows the same outline as the UNEP (2014) scenario.
Eriksen et al. (2014) scenario:
• Eriksen et al. (2014) estimates that 15 % of all items leaked into the ocean ends up on
beaches.
• The calculations then follows the same outline as the UNEP and Eunomia scenario.
United Kingdom
• Based on the Great British Beach Clean (2016) weekend initiative, the composition of
debris collected had 1.08 % number of items that were plastic bags.
• Surfers Against Sewage (2014) has estimated that the total number pieces of litter that
ends up on the shores in the UK are about 41 million
• The total annual cleanup cost of this, based on the three different salary scenarios per
item described earlier (McIlgorm et al., 2008), then ranges between e 91-276 million/year
• The costs associated to plastic bags are 1.08 % of this cost
Fishing industry
Four different scenarios, from different sources, formed the foundation for the calculations
where low and high cost scenarios were outlined for each base scenario. General assumptions
valid for all four scenarios are the following three:
• 60-80 % of the litter is assumed to be plastics (McIlgorm et al., 2008; UNEP 2014)
65
• 40 % out of the plastic waste is assumed to be bags (both LDPE and HDPE types)
• Number of plastic bags sold in UK is set to 1 billion and in Indonesia 9.8 billion (Smithers,
2016; The Jakarta Post, 2016).
United Kingdom:
Scenario 1
• The annual cost incurred to the fishing industry and aquaculture due to littering was
estimated to be e 31.5-41.8 million by Lee (2015).
Scenario 2
• Annual cost for the Scottish fishing industry was estimated to be e 11.7-13 million by
Mouat et al. (2010).
• The Scottish fishing fleet account for 63,25 % of the annual revenue in the UK (Marine
Management Organisation, 2015)
• The annual cost e 11.7 and 13 million for the Scottish industry is therefore divided by
0.6325 in order to get the total cost of littering for UK
• This leads to an annual cost of e 18.5-20.5 million for the U.K.
Scenario 3
• The average cost per fishing vessel due to revenue losses was estimated to be e 17,000 -
19,000 annually for United Kingdom (Mouat et al., 2010)
• Two thirds of this cost was incurred from income losses and repairing costs of clearing
litter from nets and a decrease in harvestable catch (Mouat et al., 2010)
• The total cost to the fishing industry is then calculated by multiplying the average cost
per fishing vessel with the number of vessels in the British fishing fleet
Scenario 4
• An assumption that fishing vessels larger than 10 m accounted for all costs to the fishing
fleet is made
• The total cost e 11.7-13 million/year estimated by Mouat et al. (2010) is compared
with a calculation where the number of fishing vessels larger than 10 meters in Scotland
(Marine Management Organisation, 2015) is multiplied by the average cost per fishing
vessel e 17,000 19,000 (Mouat et al., 2010).
• The calculations leads to a cost of e 10.3 - 11.5 million/year and verifies the result as
compared to e 11.7 - 13 million/year estimated for Scotland by Mouat et al. (2010).
• When the calculation has been verified, the number of vessels larger than 10 meters in
the UK is multiplied with the average cost per fishing vessel, leading to a total cost of e
14-20.8 million/year
Indonesia
• No estimates from previous research has been made for the debris’ effect on the Indonesian
fishing industry
• Estimates has been benchmarked from U.K. and the estimations made in scenario 3 and
4
• According to the estimations made by Mouat et al. (2010) the cost incurred to the fishing
industry is mainly due to revenue losses and thus labor expense, therefore a feasible
comparison with Indonesia is made based on the average annual salaries for fishermen.
66
• Indonesian vessels might suffer the same outcome as the British, however an assumption
is made that the economic value is less due to lower salaries.
• Salary fisherman: UK: e 24,706 /year. Indonesia: e 5,516 /year
Scenario 1
• Based on a comparison of the GDP for U.K. and Indonesia and the fishing industry’s
respective revenue a relative size can be calculated
• GDP as of 2012 is $ 2,630 billion for U.K. (MSEP, 2014) and $ 918 billion for Indonesia
(FAO, 2014).
• Percentage of GDP from the fishing industry is 0.07 % for U.K. and 3 % for Indonesia
(MSEP, 2014; FAO, 2014).
• The relative size is then calculated to being 15 times bigger in Indonesia than for U.K.
• By benchmarking Lee (2015) cost estimate from U.K. and the concentration of plastic
marine debris, 60-80 % (Allsopp et al., 2006; McIlgorm et al., 2008; UNEP, 2014) and
plastic bag concentration of 40 % in combination with the relative size, a cost for is
calculated for Indonesia
• The total cost for this scenario is e 68-160 million/year
Scenario 2
• Average cost per fishing vessel related to plastics stems from time clearing nets ( of the
total cost, Mouat et al., 2010) where plastics represent 60-80 % of all litter in the ocean
• A fractional relationship between Indonesia vs UK is then calculated based on the annual
salaries and the cost per fishing vessel in UK
• An assumption that the non-artisanal/industrial fishing fleet accounts for all damages is
made (representing 5 % of the total number of vessels in Indonesia)
• The annual cost according to this scenario is e 49-73 million
Scenario 3
• This scenario is based on the annual cost incurred on the fishing industry in U.K. from
Mouat et al. (2010), fractions of the salary relationship (FAO, 2014) in combination with
annual fishing industry harvest (in metric tons) between U.K. and Indonesia (Marine
Management Organisation, 2014).
• The fractional relationships are multiplied with the estimation of the costs on the UK
fishing industry made by Mouat et al. (2010)
• The annual cost for this scenario is e 39.5-58.5 million
Scenario 4
• Like scenario 3, the fractional relationships of average annual salary for a fisherman and
the annual fishing industry harvest between respective country is multiplied with the
estimation made by Lee (2015)
• The annual cost for this scenario is e 67-119 million
City cleanup
• The cost of cleaning up cities are based on Monroe et al. (2013) estimates made for the
two largest investigated American cities Los Angeles & San Diego in combination with an
overall average cost for the six ”large cities” (population ¿ 250,000) since the calculations
are to be made on London and Jakarta that falls into the same ”large city” category
67
• The report has calculated a cleanup cost per capita based on various variables accounting
for ”all levels of managing aquatic debris, and litter that could become aquatic debris”
(Monroe et al., 2013)
• The number of plastic bags sold in the investigated cities by Monroe et al., 2013, is
converted to London and Jakarta based on data for bag consumption per capita and
annual plastic bag sales
• The conversion to the cities Jakarta (Indonesia) and London (U.K.) is then made based
on population and PPP for respective country
• 8-25 % of the cleanup cost is estimated to come from plastic bags (Monroe et al., 2013)
• The paper bags are assumed to have a sale being a third of plastic bags
• The cost incurred due to paper bags is assumed to be 10 % of the plastic bags, due to
the low decomposing rate compared to plastics
Indonesia - Jakarta
• Jakarta population is 9.8 million (Globaldata Intelligence Center, 2016)
• The PPP is 10,432 compared to the U.S. 56,116 (Globaldata Intelligence Center, 2016)
• The total number of bags consumed is 9.8 billion and the population is 250 million people
in Indonesia, which gives a consumption per capita of roughly 40 bags per year
• The consumption per capita in the capital Jakarta is assumed to be slightly above the
average consumption, thus 50 plastic bags per capita is used for the calculations
• The cost per bag is then calculated by dividing the cost from cleaning all plastic bags
with the total plastic bag consumption in Jakarta in a low, average and high cost scenario
based on the 8-25 % incurred costs by plastic bags as stated by Monroe et al. (2013).
• The cost for paper bags is then calculated as a third of the bag per capita consumption
and 10 % of the incurred cost from the three plastic bag scenarios
United Kingdom - London
• London population is 8.7 million (Globaldata Intelligence Center, 2016)
• The PPP is 39, 150 for England (Globaldata Intelligence Center, 2016)
• Plastic bag consumption is for the city cleanup scenario 7 billion annually (British Gov-
ernment, 2016), the UK population is 64 million leading to a capita plastic bag consump-
tion of approximately 110 bags per year in the U.K. and an estimated 120 bags per capita
and year for London
• The paper bag cost is calculated in the same way as for the Jakarta case
CO2 Impact
• The different CO2-pricing models are listed below in ceg in order to asses the value
chain’s environmental cost (Material production, Material transport, Packaging produc-
tion, Packaging transport)
• World Bank (2016) sets a CO2 price of 80 - 120 $/ton 0.0075 - 0.0113 ceg CO2
• Moore and Diaz (2015) sets a CO2 price of 220 $/ton 0.0208 ceg
• Each step of the value chain’s CO2-emissions are listed in the report by Dahlgren et al.
(2015; 2016)
• However, the material and packaging transport had to modified for the paper bags, since
the report had calculated on the distance Sweden to Germany
68
• For the transportation to United Kingdom, the same distance was assumed. The CO2
released due to transportation to Indonesia were modified and eventually multiplied with
a factor of 1.7 to account for the longer distance
69

FULLTEXT01

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FULLTEXT01

Uploaded by

Copyright:

Available Formats

EXAMENSARBETE INOM INDUSTRIELL EKONOMI,

From Plastic to Paper

Master of Science Thesis INDEK 2017:51

Examensarbete INDEK 2017:51

5 Mapping the Externalities 18

6 Assessing the Externalities 21

7 Results - Cost of Externalities 34

8 Analysis - Internalization and Comparison 46

Appendix B - Interview Scheme 63

Appendix C - Assumptions and Estimations for Quantitative Study 64

1.3 Aim & Purpose

1.4 Research Questions

1.5.1 Data Collection

1.5.2 Data Restrictions

In this chapter an overview of the packaging industry is presented, including an introduction

2.1 The Packaging Industry

Figure 1: Packaging material types, distribution and end markets

Table 1: Classes of Plastics

2.2.1 Biobased- and Biodegradable Plastics

2.3 Fibre-based Packaging

3.1 Research Design

Figure 2: Project Process

3.1.2 Literature Review and Quantitative Study

3.1.3 Qualitative Methods - Interviews

3.1.4 Data Analysis

3.2 Reliability and Validity

4.1 The Circular Economy

Figure 3: Linear vs Circular Economy

4.1.1 The Circular Economy in Business

4.3 Life Cycle Assessment

4.4 Carbon Pricing Models

5.1 Case Countries

5.2 Identifying the Externalities Using United Nations’ Sustainable

5.3 Measuring Areas

6.1 The Externalities from Paper and Plastic Bags

6.2 CO2 Impact

6.3 Marine Debris

Marine debris is defined as the following by McIlgorm et al. (2008):

Figure 7: Source of marine litter

Figure 8: Where Plastics End up

6.4 Beach Cleanup

6.5 City Cleanup

Figure 11: Share of Cleanup Cost

6.6 Fishing Industry

6.10 Health Concerns

7.1 Cost of CO2 Impact

7.1.1 Cost of CO2 Impact Indonesia

7.1.2 Cost of CO2-impact U.K.

7.2 Impact on Fishing Industry

7.2.1 Fishing Industry Indonesia

7.3 City Cleanup Cost

7.3.1 City Cleanup Jakarta

Figure 20: City cleanup cost per sold bag Indonesia

7.4.1 Beach Cleanup Cost Indonesia

7.4.2 Beach Cleanup Cost U.K.

Table 4: Results from the Great British Beach Clean in 2016

7.5 Annual Direct Cost Comparison

7.6 Cost Per Bag Comparison - Indonesia

7.7 Cost Per Bag Comparison - United Kingdom

8.1 Quantified Externalities - Direct Costs

8.2 Including Other Externalitites - Indirect Costs

9.1 The Packaging Industry’s Circumstances and Future Prospects

9.2 The Circular Economy Perspective