Typically, the collection of e-waste, as it is called, is not the responsibility of the companies who manufacture the products, and to date, few policymakers have championed legislation that would force companies to appropriately dispose of their e-waste.
However, new data from Scott Webster, professor of supply chain management, finds that there may be an economic incentive for policymakers to begin more serious deliberation of legislation around the collection/disposal of e-waste. “Relative to the option of no take-back laws, we found that the adoption of collective Waste Electrical and Electronic Equipment (WEEE) take-back legislation—that is, policies where the government coordinates the collection/disposal of returns and charges the manufacturers for the cost—can result in higher manufacturer and remanufacturer profits,” Webster says.
WEEE take-back legislation is modeled after the 2003 European Union (EU) law, which has since been made into a legal framework by all but two EU member states.
Though some U.S. states are currently considering e waste legislation, few have enacted take-back laws, which require manufacturers to incur the costs of collection/disposal of ewaste. Maine has enacted the Extended Producer Responsibility Act (LD 1892) by which municipalities collect electronics and invoice the manufacturers of returned products for the cost of collection and transport to recyclers. Pending Minnesota bills such as HF 882 and SF 838 would make electronics manufacturers responsible for collection/disposal costs.
Webster’s study, forthcoming in the Journal of Operations Management and co-written with Supriya Mitra, a recent SU Ph.D. graduate who is now with Tata Consulting Services in India, found that collective WEEE take-back is more economically advantageous than individual WEEE take-back, where the manufacturer—instead of government—has responsibility for the collection and disposal of its products.
“Policymakers interested in e-waste should consider that
individual WEEE take-back carries the risk of the manufacturer forcing the remanufacturer out of business by charging the remanufacturer a high price for returned products,” Webster says. “In general, individual WEEE take-back is best suited only to industries where remanufacturing by a firm other than the OEM [Original Equipment Manufacturer] is not especially desired or valued.”
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He continues: “Individual WEEE take-back may reduce the role of government in disposing of e-waste, but ultimately, collective WEEE take-back, more so than individual, leads to increased manufacturer and remanufacturer profitability, simultaneously spurring remanufacturing activity and reducing the tax burden on society.”
Webster says that in settings where remanufacturing is not profitable and no take-back law is in effect, the enactment of collective WEEE take-back laws will sometimes create a structural change in the industry that results in the introduction of remanufactured goods.
“With the enactment of collective WEEE take-back, the manufacturer benefits from lower collection/disposal costs as remanufacturing volume increases, so there is an incentive for the manufacturer to allow the remanufacturer to profitably enter the market,” says Webster.
When this occurs, the drawback is that, though there may be a reduced tax burden and an emergence of remanufacturing where none existed before, manufacturer profit will likely decrease and new product prices increase.
In future research, Webster and Mitra plan to examine industry performance under various conditions when mandatory take-back laws are not in effect in order to lend insight into the role and impact of government subsidies for remanufacturing.
Scott Webster is a professor of supply chain management in the Department of Marketing. He earned a Ph.D. in operations management and decision sciences from Indiana University. His current research focuses on issues related to improving competitiveness through logistics, including scheduling, policies for managing a supply chain, and the design of distribution networks. Webster recently held one of two prestigious Whitman Research Fellowships (2004-2006). He teaches
undergraduate and graduate courses in operations and supply
chain management.
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