California Department of Resources Recycling and Recovery (CalRecycle)

Economic Incentives

Economic incentives are mechanisms that provide financial rewards for reducing environmental impacts or penalties for increasing them. Some economic incentives provided by the Department of Resources Recycling and Recovery (CalRecycle) includes grants to address household hazardous waste, used oil, and tires. In addition, CalRecycle’s Recycling Market Development Zone Loan Program combines recycling with economic development to fuel new businesses, expand existing ones, create jobs, and divert waste from landfills. However, CalRecycle has no dedicated funding to provide grants and other incentives for the vast majority (i.e., approximately 90 percent) of the disposal stream, which is composed of organics and materials such as plastics and construction and demolition debris.

June 2009 Economic Incentives Workshop

An Economics Incentives Workshop held in June 2009 included discussion about economic incentives that could be used to assist jurisdictions and businesses in diverting material from the landfill and using more organic and recyclable materials. This information is helping CalRecycle continue to achieve strategic directives regarding organic materials and development of additional processing and manufacturing infrastructure in the state.

Financial Economic Incentives

The following categories are financial economic incentives and disincentives that are either currently applied or could be applied to increase diversion of organics and other recyclable materials. These categories focus on incentives and programs that are not offered by the CalRecycle or the Department of Conservation.

Funding: Grants, Loans, and Bonds

Grants are a sum of non-refunded money given by a government agency for specific purpose.

Loans are money borrowed from a government agency.

Bonds are certificates issued by a government or public company promising to repay money at a fixed rate and specified time.

Tax Credits

Tax Credits reduce business tax liability.

Tradable Permits and Tariff Contracts

Tradable Permits are market-oriented environmental policy that sets a ceiling on the quantity of pollution allowed, and give marketable or tradable permits to emit pollutants up to a cap.

Tariff Contracts are guaranteed contracts that provide predictable revenue streams over a specified term, with specified operating conditions.

Tipping Fees

  • Local Disposal Tipping Fees provide funding for diversion programs administered by CalRecycle and local jurisdictions. Tipping fees are generally used to fund daily operational and closure costs of a landfill, but may also be used to fund recycling programs, litter abatement, public education efforts, and other programs. A local tipping fee can act as an incentive to encourage certain practices or disincentive to discourage other practices. For example, the disposal tipping fee for compostable organic materials can be set at a much higher rate than that set by the composting facility. This would act as an incentive for haulers to bring these materials to the compost facility rather than the landfill.
  • Integrated Waste Management Account Disposal Tipping Fee. CalRecycle’s current maximum tipping fee of $1.40 per ton took effect on July 1, 2001. State law [AB 1220 (Eastin) Chapter 656, Statutes of 1993] caps the tipping fee at this level. The current fee of $1.40 per ton is so low as to offer little disincentive to landfilling. In the past, attempts to raise the tipping fee have been defeated (e.g., AB 1610, Nunez). In the event the tipping fee is increased, one option for these funds is developing a grant program that would provide new incentives for diversion activities.
  • Differential Fee structures (PDF, 189 KB) can be used to incentivize products and manufacturing processes.

Resources for Business and Industry

Last updated: September 3, 2010
CalRecycle, http://www.calrecycle.ca.gov
Public Affairs Office, opa@calrecycle.ca.gov (916) 341-6300