Economics Report: Analysis of Hong Kong MSW Charging System Impact

This report provides an economic analysis of Hong Kong's Municipal Solid Waste (MSW) charging system. It explores the rationale behind the quantity-based MSW charging system as a waste reduction strategy, applying economic principles to explain its effectiveness. The report examines the impact of the charging system on demand and supply, illustrating changes with diagrams. It also discusses the implications of exemptions, the optimal approach to implementation, and the influence of consumer behavior. Furthermore, it addresses the obstacles faced by low-income and unemployed individuals and evaluates the feasibility of the charging scheme by measuring changes in garbage bag consumption. The report concludes that the Hong Kong government is taking the right steps to control the use of garbage bags and reduce waste, as the charging system motivates people to reduce their usage of plastic bags.

ECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
(1).....................................................................................................................................................1
(2).....................................................................................................................................................1
(A)...............................................................................................................................................1
(B)...............................................................................................................................................2
(1).......................................................................................................................................2
(2).......................................................................................................................................2
©..................................................................................................................................................2
(D)...............................................................................................................................................3
(3).....................................................................................................................................................3
(4).....................................................................................................................................................3
(5).....................................................................................................................................................4
(6).....................................................................................................................................................4
(7).....................................................................................................................................................4
(8).....................................................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
In current time period most of the nations government are concerned about use of plastic. In
this regard Hong Kong government take unique steps under which people have to buy garbage
bags from the Government and need to make payment. Such kind of thing increase expenses for
the people and this motivate them to reduce use of garbage bag. In the present report detail
discussion is carried out on this topic and economic concepts are applied. In this way, entire
research work is carried out.
(1)
Demand and supply are the forces that determine consumption of the product in the
market. Nation government every year launch multiple campaigns that educate people about
harm that polybags do to natural environment. People does not get changed and regularly make
use of polybags to carry items (Woon and Lo, 2016). There is consistent increase in demand and
supply of the product and due to this reason Government feel need to bring MSW charging
system. Under this system people have to purchase bags and have to pay to government certain
dollars. Such kind of thing will prove costly to the people and due to this reason demand will
decline. Thus, MSW charging system is the ultimate goal in effort to reduce waste.
(2)
(A)
Figure 1Shift in demand curve
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In the above chart it can be seen that demand decline from D1 to D3 and supply remain same.
Hence, price decline from P1 to P3.
(B)
(1)
As per article some suggested that Government should exempt people those who have
low income. Government must give poor people free bags to some extent and then must charge
money on bags once their use cross exempt level. However, some people think that it is the
responsibility of everyone to protect natural environment and due to this reason, such kind of
exemption must not be given to the people (Arı and Yılmaz, 2017). Apart from this many people
think that if exemption will be given then other people will demand multiple exemptions which
will hinder effective implementation of the waste control concept. Hence, no exemption must be
given to the people just on ground of poverty.
(2)
Main problem that government faced is that either they must charge on C&I first or must
charge both C&I and general public altogether. Few one have opinion that initially C&I sector
must be charged and thereafter when one year passed general public must be charged. However,
the SDC believe that all entities whether they are firm or general public must be treated equally
as it is responsibility of all to protect environment. It is belief of the relevant officers that because
of phased implementation problems may be observed in the effective implementation of the
wastage control plan. It is expected that C&I may involve in charge evasion may occur if waste
is transferred from a sector subject to charging to another which has yet to be charged (Lo and
Woon, 2016). Apart from this, it is very hard task to determine whether garbage is of general
public or C&I. Thus, in order to sort out all these problems general public and C&I must be
charged on single go.
©
It can be observed that in each nation people have different spending pattern for example
in country like India people save more and spend less. On other hand, in USA and UK people
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spend more and save less. Total consumption of garbage bags and government income depend
on people spending pattern. Both sort of behaviour is analysed below.
If people have money saving nature
In case people have money saving nature then in that case consumption of garbage bag
will reduce as they know that up to certain quantity of garbage bag are free but after that they
have to make payment (Xanthos. and Walker, 2017). Hence, to save money they will reduce use
of garbage bag. Ultimately, government income will reduce.
If people haver less money saving nature
In case people have less money saving nature then in that case consumption of garbage
bag will increase as they know that up to certain quantity of garbage bag are free and after that
they have to make payment. Hence, such kind of people think that already their money is saved
and they will use more garbage bag. Ultimately, government income will increase.
(D)
Consumption of the plastic bags will reduce because already they are receiving limited
quantity of bags. In case all bags come to end people will not have any container where they can
dispose garbage. Hence, use of garbage bag will reduce.
(3)
Main reason behind granting a transitional period to the general public is that residential
buildings may require more time in order to achieve consensus on the method that they need to
adopt in order to reduce charge on waste or use of garbage bag. As part of method people may
need to change waste collection arrangements so that efficient system can be developed which
lead to low cost and easy management (Jefferson, 2019). Such kind of thing will ensure easy
adoption of Government waste control measures by the general public.
(4)
Charging mechanism is the one of the factor that motivate people to move towards “by
household by bag” scheme. Experience of many other nations reflect that waste charging provide
incentive to the people to bring change in their behaviour in respect to waste prevention and its
disposal in proper manner.
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(5)
Major obstacle is that consumption of garbage bag depends on the household requirements.
If one is earning less income then in that case now it has to bear additional expenses. In case
economic turmoil happened then in that case people can also become unemployed and in such
kind of situations it is hard for people to pay for garbage bag (Wadehra and Mishra, 2018). Thus,
for low income and jobless people it is additional expense and it is one of major obstacle for
people to accept moving to “by household by bag” campaign.
(6)
During transition period change in waste will be observed because people have to make
additional expenditure to garbage such kind of waste. It is common concept in the economics
that if people think that they have to pay more for any product demand get decline. In same way
people will consider expenditure made on purchase of garbage bag as additional expense and due
to this reason will generate less waste or will try to fill maximum items in as much as few
garbage bags (Smith-Llera, 2018). Ultimately, decline will be observed in waste or use of
garbage bag.
(7)
Figure 2External cost diagram
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No charging level would not be sufficient to induce behavioural change as wanted by the
Government. This is because reduction in the use of plastic bag is required by the large
percentage. Hence, if charge will be high then in that case people will less use garbage bag.
Private cost in above diagram indicate amount that seller of product charged and social cost
reflect amount that one have to pay for harming natural environment (Sharma, and Chatterjee,
2017). In present case one has to pay difference amount between social cost and private cost on
garbage bag. If higher amount will be charged by the government then demand will decline from
Q1 to Q2 and amount paid overall will increase.
(8)
Feasibility of the entire charging scheme can be measured by identifying difference in
consumption of garbage bags on monthly basis. If one intends to measure feasibility of the
project before it get start then by applying economic concept feasibility of the project can be
determined (The end of the plastic bag., 2019). After implementation of this policy cost of
purchase will increase for the people due to which use of garbage bag will be reduced and people
will use it only when required. Thus, because of this reason project seems feasible. Law of
demand also state that if price increase demand decline. Thus, with increase in cost of purchase
demand of garbage bags will also reduce.
CONCLUSION
On basis of above discussion, it can be said that Hong Kong government is taking right step
to control use of garbage bags. When people will also pay for their use then they will be
demotivated to use it for carrying products. Ultimately, waste will be reduced from Hong Kong.
It is usually observed that most of times Government bring a rule under which it bans use of
plastic but after days its use again increases at rapid rate. People does not understand the
significance of not using garbage bag and due to this reason Government take such kind of step
so that people can be motivated to make less use of polybags. It is also concluded that such kind
of steps will prove effective because people will pay more then current. Hence, in order to
control expenses people will definitely reduce use of garbage bags.
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REFERENCES
Books and Journals
Arı, E. and Yılmaz, V., 2017. Consumer attitudes on the use of plastic and cloth
bags. Environment, Development and Sustainability. 19(4). pp.1219-1234.
Jefferson, M., 2019. WHITHER PLASTICS?—Petrochemicals, plastics and sustainability in a
garbage-riddled world. Energy Research & Social Science. 56. p.101229.
Lo, I.M. and Woon, K.S., 2016. Food waste collection and recycling for value-added products:
potential applications and challenges in Hong Kong. Environmental Science and Pollution
Research. 23(8). pp.7081-7091.
Sharma, S. and Chatterjee, S., 2017. Microplastic pollution, a threat to marine ecosystem and
human health: a short review. Environmental Science and Pollution Research. 24(27).
pp.21530-21547.
Smith-Llera, D., 2018. Trash Vortex: How Plastic Pollution Is Choking the World's Oceans.
Capstone.
Wadehra, S. and Mishra, A., 2018. Encouraging urban households to segregate the waste they
generate: Insights from a field experiment in Delhi, India. Resources, Conservation and
Recycling. 134. pp.239-247.
Woon, K.S. and Lo, I.M., 2016. A proposed framework of food waste collection and recycling
for renewable biogas fuel production in Hong Kong. Waste management. 47. pp.3-10.
Xanthos, D. and Walker, T.R., 2017. International policies to reduce plastic marine pollution
from single-use plastics (plastic bags and microbeads): a review. Marine pollution
bulletin. 118(1-2). pp.17-26.
Online
The end of the plastic bag., 2019. [Online]. Available through:<
https://www.spireresearch.com/spire-journal/2010-2/q4/the-end-of-the-plastic-bag/>.
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