Description:
AbstractThe use of recycled material is a key building block for the circular economy. In this study, we explore the impact of recycling laws in Japan on the use of recycled materials in the production process of intermediate plastics. Using a difference-in-differences approach, we investigate whether the input share of recycled plastics in intermediate plastic products increased after the Container and Packaging Recycling Law (CPR Law) was enforced in 1997 in Japan. Results indicate that the input share of recycled plastics increased by 1 percentage point after the law’s implementation. Meanwhile, the input share of virgin plastic materials, such as polyethylene, polypropylene, and vinyl chloride, per plastic product decreased by 3 percentage points on average. These results suggest that the CPR law helped shift inputs from virgin plastics to recycled plastic materials even though the impact size has been small. To further encourage the use of recycled plastic materials, policy interventions should directly incentivize producers to increase the use of recycled plastics.