Exploring Plastic Waste Externalities and Policy Interventions: A Global Case Study

Nyan Lin Htut

Department of Business Management, University of the People

BUS 1103 - Microeconomics

Mrs. Kristine Beaird (Instructor)

Word Count: 672 words

March 25, 2024

 Global Concerns of Plastic Waste and Marine Pollution

The crisis of plastic waste and marine pollution has raised significant global concerns due to its

detrimental impact on marine life, ecosystems, and economies. Improper disposal of plastic

waste leads to negative externalities, including:

 Impact on Marine Life: Improperly disposed plastic waste poses a severe threat to marine life,

as marine animals often mistake plastic for food, leading to ingestion and entanglement. This can

result in injury, suffocation, and death, disrupting the marine food chain and biodiversity.

 Ecosystem Degradation: Plastic pollution contributes to the degradation of marine ecosystems,

affecting habitats such as coral reefs and coastal areas. The accumulation of plastic waste alters

the physical and chemical properties of the marine environment, leading to long-term ecological

imbalances.

 Economic Consequences: The crisis also imposes economic burdens, including costs associated

with beach clean-ups, tourism losses due to polluted coastlines, and impacts on fisheries and

aquaculture. Additionally, the presence of plastic waste in oceans can damage vessels and

infrastructure, leading to maintenance and repair expenses.

Addressing these negative externalities requires urgent action to mitigate the impact of plastic

waste and marine pollution on the environment, biodiversity, and economies.

Analyzing the Efficiency Implications of Plastic Waste Externalities

Plastic waste externalities lead to market inefficiencies and suboptimal resource allocation in

several ways:
 Environmental Costs: The mismanagement of plastic waste results in environmental

degradation, affecting ecosystems, wildlife, and human health. These costs are not accounted for

in the market, leading to an inefficient allocation of resources.

 Clean-up Costs: Governments and communities incur significant expenses in cleaning up plastic

waste from public spaces, water bodies, and landfills. These costs are not factored into the

production and consumption of plastic, leading to a misallocation of resources.

 Loss of Natural Resources: The production of plastic requires significant amounts of fossil

fuels and energy. When plastic is not properly managed and ends up as waste, it represents a loss

of these valuable resources, contributing to suboptimal resource allocation.

 Negative Externalities: Plastic pollution imposes costs on society in the form of reduced

aesthetic value, harm to tourism, and damage to marine ecosystems. These negative externalities

are not reflected in the market prices of plastic products, leading to an inefficient allocation of

resources.

Examining Policy Interventions and International Collaborations to Address the Plastic

Waste Crisis

Policy interventions and international collaborations play a crucial role in addressing the plastic

waste crisis. Several measures and global agreements have been implemented to reduce plastic

waste and mitigate its externalities.

 Effectiveness of Measures and Agreements:

o Positive Outcomes:

o The Basel Convention, which controls the transboundary movements of hazardous wastes, has

been amended to include plastic waste, leading to better regulation and management.
o The European Union's Single-Use Plastics Directive aims to reduce the impact of certain plastic

products on the environment, particularly in the marine environment.

o The Ocean Plastics Charter, endorsed by several countries at the G7 summit, focuses on

improving waste management and recycling to prevent plastic from entering the oceans.

o Negative Outcomes:

o Despite international agreements, enforcement and compliance with regulations remain a

challenge in many regions.

o Some policies may lead to unintended consequences, such as the shift to alternative materials

that have their own environmental impacts.

 Examples of Successful Interventions:

o Rwanda's Plastic Bag Ban: Rwanda implemented a ban on non-biodegradable plastic bags,

leading to a significant reduction in plastic pollution and serving as a model for other nations.

o Norway's Deposit Return System: Norway's successful implementation of a deposit return

system for plastic bottles has increased recycling rates and reduced plastic litter.

In conclusion, while policy interventions and international collaborations have shown some

success in reducing plastic waste, challenges remain in enforcement and addressing unintended

consequences. More comprehensive and coordinated efforts are needed to effectively mitigate

the externalities of the plastic waste crisis. The mismanagement of plastic waste creates external

costs that are not accounted for in the market, leading to inefficiencies and suboptimal allocation

of resources. Addressing these externalities is crucial for achieving a more sustainable and

efficient use of resources.

 References

Shapiro, D., MacDonald, D., Greenlaw, S. A., Dodge, E., Gamez, C., Jauregui, Andres., Keenan,

D., Moledina, A., Richardson, C., & Sonenshine, R. (2023). Principles of microeconomics (3rd

ed.). OpenStax. Licensed under CC 2.0

UNEP. (2021). From pollution to solution: A global assessment of marine litter and plastic

pollution. UN environment programme.