Abstract
Abstract : The use of plastic bags poses serious challenges to the environment. In 2003, to curb the use of plastic bags, the government of South Africa applied a minimum gauge of plastic and a levy, targeting consumers. But in the 15 years since the introduction of the plastic bag regulation, its effectiveness has diminished as consumers have grown accustomed to paying for bags. A possible reason for this is that the levy was low, relative to both income and goods per bag. Setting the price at an appropriate level now seems key. Policymakers have little experience regarding designing the right levels of pricing for plastic bags. More research is required on the correct levels of bag pricing so that policymakers can be better advised, which may ultimately result in the sustainable use of plastic bags. Consequently, assessing the prospect of increasing bag prices in the case of South Africa is crucial for developing and implementing appropriate policies that might be necessary for sustainable environmental management. Moreover, charging appropriate bag prices could alleviate the adverse effects associated with the use of substitute carrier bags. Prices for bags are generally set low; they are largely a symbolic reminder to consumers of the environmental concerns attributed to plastic bag use. The ineffectiveness of charging for bags in the long term makes it imperative that the optimal price is set. To address this issue, a survey was developed using the Contingent Behaviour (CB) approach to generate the stated preference (SP) data necessary to estimate the optimal price for bags that is likely to lead to a reduction in bag use over time. Thus, the aim of this study is to estimate the bag-use demand function for plastic shopping bags in South Africa, to determine the scope for raising prices charged to consumers that is required to reduce bag use in the long term. These estimates are done using the contingent behaviour (CB) methodology. The current price of R0.40 was found to be too low, and highly inelastic. Our analysis suggests that the price for plastic bags in South Africa should be set at R6.40. There is no danger of consumers shifting altogether or even significantly to substitutes that may be even more environmentally damaging to the environment.
M.Com. (Development Economics)