IDEAS home Printed from https://ideas.repec.org/a/spr/circec/v3y2023i1d10.1007_s43615-022-00171-z.html
   My bibliography  Save this article

Policies for Material Circularity: the Case of Lithium

Author

Listed:
  • Diana Roa

    (Norwegian University of Life of Sciences)

  • Knut Einar Rosendahl

    (Norwegian University of Life of Sciences)

Abstract

Improper waste management carries social risks and dissipates high-value materials. Moreover, material market prices do not reflect these hidden costs and values. Two important questions are how prices can inform society about their resource use impact and how market-based policies optimize material circularity. This study adds to the literature by analyzing the effect of market-based policies aimed at promoting circular material reuse in a market defied by harmful waste but enhanced by recycling. The findings indicate that a landfill tax is a first-best policy since it targets the external costs of waste disposal, improves welfare, reduces damages, and boosts recycling. If a landfill tax is not feasible, other programs like taxes, subsidies, and a tax-subsidy scheme provide second-best results. Remarkably, recycling subsidies can stimulate higher raw material extraction and generate rebound effects. We also explore other non-market-based strategies to prevent waste and make recycling more cost-competitive and easier to recycle. The numerical results and sensitivity analysis of the lithium market illustrate the model's flexibility and prove why some policies are superior to others for reducing waste and creating value from used materials. Our study results serve as a guide to designing policies for optimal material circularity.

Suggested Citation

  • Diana Roa & Knut Einar Rosendahl, 2023. "Policies for Material Circularity: the Case of Lithium," Circular Economy and Sustainability, Springer, vol. 3(1), pages 373-405, March.
    • Handle: RePEc:spr:circec:v:3:y:2023:i:1:d:10.1007_s43615-022-00171-z
    DOI: 10.1007/s43615-022-00171-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43615-022-00171-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43615-022-00171-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Don Fullerton & Wenbo Wu, 2002. "Policies for Green Design," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 5, pages 102-119, Edward Elgar Publishing.
    2. Don Fullerton & Thomas C. Kinnaman, 2002. "Garbage, Recycling, and Illicit Burning or Dumping," Chapters, in: Don Fullerton & Thomas C. Kinnaman (ed.), The Economics of Household Garbage and Recycling Behavior, chapter 2, pages 49-62, Edward Elgar Publishing.
    3. Walls, Margaret & Palmer, Karen, 2001. "Upstream Pollution, Downstream Waste Disposal, and the Design of Comprehensive Environmental Policies," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 94-108, January.
    4. Knut Einar Rosendahl & Diana Roa Rubiano, 2019. "How Effective is Lithium Recycling as a Remedy for Resource Scarcity?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 985-1010, November.
    5. Hiroaki Ino & Norimichi Matsueda, 2019. "The curse of low-valued recycling," Journal of Regulatory Economics, Springer, vol. 55(3), pages 282-306, June.
    6. Dixit, Avinash K., 1990. "Optimization in Economic Theory," OUP Catalogue, Oxford University Press, edition 2, number 9780198772101.
    7. Bocar Samba Ba & Philippe Mahenc, 2019. "Is Recycling a Threat or an Opportunity for the Extractor of an Exhaustible Resource?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1109-1134, August.
    8. Ino, Hiroaki, 2011. "Optimal environmental policy for waste disposal and recycling when firms are not compliant," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 290-308, September.
    9. Calcott, Paul & Walls, Margaret, 2000. "Policies to Encourage Recycling and "Design for Environment": What to Do When Markets Are Missing," Discussion Papers 10567, Resources for the Future.
    10. Lafforgue, Gilles & Rouge, Luc, 2019. "A dynamic model of recycling with endogenous technological breakthrough," Resource and Energy Economics, Elsevier, vol. 57(C), pages 101-118.
    11. Nordhaus, William D, 1974. "Resources as a Constraint on Growth," American Economic Review, American Economic Association, vol. 64(2), pages 22-26, May.
    12. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, September.
    13. Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 360-394, August.
    14. Gavin Harper & Roberto Sommerville & Emma Kendrick & Laura Driscoll & Peter Slater & Rustam Stolkin & Allan Walton & Paul Christensen & Oliver Heidrich & Simon Lambert & Andrew Abbott & Karl Ryder & L, 2019. "Recycling lithium-ion batteries from electric vehicles," Nature, Nature, vol. 575(7781), pages 75-86, November.
    15. Binswanger, Mathias, 2001. "Technological progress and sustainable development: what about the rebound effect?," Ecological Economics, Elsevier, vol. 36(1), pages 119-132, January.
    16. Margaret Walls & Paul Calcott, 2000. "Can Downstream Waste Disposal Policies Encourage Upstream "Design for Environment"?," American Economic Review, American Economic Association, vol. 90(2), pages 233-237, May.
    17. Robert M. Solow & Frederic Y. Wan, 1976. "Extraction Costs in the Theory of Exhaustible Resources," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 359-370, Autumn.
    18. Pittel, Karen & Amigues, Jean-Pierre & Kuhn, Thomas, 2010. "Recycling under a material balance constraint," Resource and Energy Economics, Elsevier, vol. 32(3), pages 379-394, August.
    19. Grant, Darren, 1999. "Recycling and market power: A more general model and re-evaluation of the evidence1," International Journal of Industrial Organization, Elsevier, vol. 17(1), pages 59-80, January.
    20. Donald A. Hanson, 1980. "Increasing Extraction Costs and Resource Prices: Some Further Results," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 335-342, Spring.
    21. Rebecca E. Ciez & J. F. Whitacre, 2019. "Examining different recycling processes for lithium-ion batteries," Nature Sustainability, Nature, vol. 2(2), pages 148-156, February.
    22. Kushnir, Duncan & Sandén, Björn A., 2012. "The time dimension and lithium resource constraints for electric vehicles," Resources Policy, Elsevier, vol. 37(1), pages 93-103.
    23. Junne, Tobias & Wulff, Niklas & Breyer, Christian & Naegler, Tobias, 2020. "Critical materials in global low-carbon energy scenarios: The case for neodymium, dysprosium, lithium, and cobalt," Energy, Elsevier, vol. 211(C).
    24. Martin, Robert E, 1982. "Monopoly Power and the Recycling of Raw Materials," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 405-419, June.
    25. Wang, Xue & Gaustad, Gabrielle & Babbitt, Callie W. & Richa, Kirti, 2014. "Economies of scale for future lithium-ion battery recycling infrastructure," Resources, Conservation & Recycling, Elsevier, vol. 83(C), pages 53-62.
    26. Lisa A. Levin & Diva J. Amon & Hannah Lily, 2020. "Challenges to the sustainability of deep-seabed mining," Nature Sustainability, Nature, vol. 3(10), pages 784-794, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Knut Einar Rosendahl & Diana Roa Rubiano, 2019. "How Effective is Lithium Recycling as a Remedy for Resource Scarcity?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 985-1010, November.
    2. Lafforgue, Gilles & Lorang, Etienne, 2022. "Recycling under environmental, climate and resource constraints," Resource and Energy Economics, Elsevier, vol. 67(C).
    3. Ba, Bocar Samba & Soubeyran, Raphael, 2023. "Hotelling and recycling," Resource and Energy Economics, Elsevier, vol. 72(C).
    4. Zhou, Sophie & Smulders, Sjak, 2021. "Closing the loop in a circular economy: Saving resources or suffocating innovations?," European Economic Review, Elsevier, vol. 139(C).
    5. Walls, Margaret, 2011. "Deposit-Refund Systems in Practice and Theory," RFF Working Paper Series dp-11-47, Resources for the Future.
    6. Patrik Söderholm & Tomas Ekvall, 2020. "Metal markets and recycling policies: impacts and challenges," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 257-272, July.
    7. Matsueda, Norimichi & Nagase, Yoko, 2012. "An economic analysis of the Packaging waste Recovery Note System in the UK," Resource and Energy Economics, Elsevier, vol. 34(4), pages 669-679.
    8. Acuff, Kaylee & Kaffine, Daniel T., 2013. "Greenhouse gas emissions, waste and recycling policy," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 74-86.
    9. De Beir, Jean & Fodha, Mouez & Magris, Francesco, 2010. "Life Cycle Of Products And Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 14(2), pages 212-230, April.
    10. Numata, Daisuke, 2009. "Economic analysis of deposit–refund systems with measures for mitigating negative impacts on suppliers," Resources, Conservation & Recycling, Elsevier, vol. 53(4), pages 199-207.
    11. Söderholm, Patrik, 2011. "Taxing virgin natural resources: Lessons from aggregates taxation in Europe," Resources, Conservation & Recycling, Elsevier, vol. 55(11), pages 911-922.
    12. Brian Chi-ang Lin & Siqi Zheng & Ankinée Kirakozian, 2016. "One Without The Other? Behavioural And Incentive Policies For Household Waste Management," Journal of Economic Surveys, Wiley Blackwell, vol. 30(3), pages 526-551, July.
    13. Wolfram Berger & Yoko Nagase, 2018. "Waste management regulation: policy solutions and policy shortcomings," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(3), pages 205-223, July.
    14. Calcott, Paul & Walls, Margaret, 2005. "Waste, recycling, and "Design for Environment": Roles for markets and policy instruments," Resource and Energy Economics, Elsevier, vol. 27(4), pages 287-305, November.
    15. Matthew Gunter, 2007. "Do Economists Reach a Conclusion on Household and Municipal Recycling?," Econ Journal Watch, Econ Journal Watch, vol. 4(1), pages 83-111, January.
    16. Daniel T. Kaffine, 2014. "Scrap Prices, Waste, and Recycling Policy," Land Economics, University of Wisconsin Press, vol. 90(1), pages 169-180.
    17. Reyer Gerlagh & Etienne Lorang, 2024. "Material Source and Waste Taxes in Competitive Equilibrium," CESifo Working Paper Series 11091, CESifo.
    18. Jean de Beir & Mouez Fodha & Guillaume Girmens, 2007. "Recyclage et externalités environnementales. Faut-il subventionner les activités de récupération recyclage ?," Revue économique, Presses de Sciences-Po, vol. 58(3), pages 609-617.
    19. Eiji B. Hosoda, 2014. "An Analysis of Sorting and Recycling of Household Waste: A neo-Ricardian Approach," Metroeconomica, Wiley Blackwell, vol. 65(1), pages 58-94, February.
    20. Loukil, Faten & Rouached, Lamia, 2012. "Modeling packaging waste policy instruments and recycling in the MENA region," Resources, Conservation & Recycling, Elsevier, vol. 69(C), pages 141-152.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:circec:v:3:y:2023:i:1:d:10.1007_s43615-022-00171-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.