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Nickel bag tax slashes waste in D.C.

Disposable plastic bags make up 47% of the trash in the Anacostia river basin, so Washington D.C. instituted a five-cent bag tax, effective January 1. How much difference could a nickel make?

> Less than a month into the program, which D.C. officials describe as an effort to reduce litter and generate funds to clean up the Anacostia River, the nickel bag fee is having a big impact. Managers at stores that sell food or beverages say the switchover has cut the use of plastic bags by half or more. One Safeway in Northwest reports a falloff of more than 6,000 bags a week, about half of its former volume.

> And for customers, the bag law is changing the District’s carryout culture in ways large and small. A lunchtime army of office workers now ply the sidewalks with near-naked sandwiches and sodas filling their hands, making some diners more self-conscious about what they buy. Parking lots feature impromptu juggling acts as determined fee-avoiders teeter to their cars with heaping armloads of loose groceries. And people are stockpiling reusable shopping bags — and routinely forgetting to take them shopping.

Dan Ariely, a professor of economics, isn’t surprised that the small surcharge has prompted a big change in behavior.

> Because plastic bags have always been free, Ariely said, shoppers have come to see them as a kind of entitlement. Adding even a tiny fee is an affront to what they cherish as the natural order of things. “When it goes from zero to even a very small charge, it can feel very bad,” he said. “It creates a very small financial burden but a very big emotional reaction.”

The success of the bag tax have led some to optimistically surmise that even a nominal price on carbon might have major effects on consumer behavior. Allow me to now don my grumpy pants and explain why this almost certainly isn’t the case:

* The key to the success of the bag tax is that bags were formerly free. For reasons peculiar to the human heart, people really dislike paying for things they are accustomed to getting for nothing, even if the absolute value of the charge is trivial.
* Speaking of which: carbon isn’t free. Electricity costs money. Gasoline costs money. Home heating oil costs money. Worse, prices for these items are volatile, making it difficult for consumers to understand the impact of the tax.
* We’ve already tried this, part 1. America has a gasoline tax, and many years of evidence support the conclusion that the result of a modest surcharge is, well, modest.
* We’ve already tried this, part 2. Many countries, including the Kyoto signatories, have implemented various forms of carbon pricing. Happily, these schemes appear to work. But they don’t work magically through the power of suggestion. Carbon pricing needs to be implemented in the context of an effective and meaningful system of incentives.
* There’s a persistent misconception that the primary mechanism of a carbon price is to change the behavior of individuals. Personal conservation is a piece of the puzzle, but probably not as big a piece as, say, industrial efficiency and deployment of renewable energy. In these realms, economics matters more than psychology.

The good news out of D.C. is that pricing really can be a fantastic lever with which to generate positive environmental outcomes. Putting a price on carbon would surely cause less carbon to be emitted. Yea!

The bad news out of D.C. is that people get just flat-out crazy when you propose new fees of any kind. The comments section of an online poll related to the bag tax is the usual horror show: whinging about the jackboot of government; threats of boycott and economic doom; concern trolling about the manner in which the fee was implemented; and so on. The article itself ends with a quote that is almost poetic in its compressed expression of the wall of confused resentment that any environmental regulation must climb.

> “I pay enough taxes to D.C.,” said Way, the shopper with the cart full of loose items in Southeast. “They could give me a dang plastic bag.”

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