The Economics of Plastic Bag Legislation in South Africa

The Economics of Plastic Bag Legislation in South Africa

Abstract

In May 2003 South Africa introduced legislation intended to decrease plastic bag litter. It combined standards and price-based economic tools in an attempt to reduce the public’s demand for plastic bags. This paper analyses the short term effects of the legislation on bag demand. It also provides a background to these regulations and a theoretical overview. The assessment uses bag consumption data from four retailers, each representing a different consumer market. These are analysed, and respective price elasticities calculated. The results suggest that plastic bag demand is relatively price inelastic and imply that instruments utilizing price alone, would have limited efficacy. However, the combination of standards and pricing successfully curbed plastic bag use in the short run. Further analysis suggests that the effectiveness of the legislation may be declining over time.