What are the statewide impacts of a plastic bag ban?

We may not have plastic bags drifting through the wind much longer. With the statewide preemption on plastic bag regulations going away, municipalities like Philadelphia and Pittsburgh have taken steps to implement single-use plastic bag bans. Other municipalities including the boroughs of West Chester and Narberth also implemented bans, with enforcements coming down the road. 

As Philadelphia begins to grapple with a plastic bag ban and other areas are gearing up toward having one in place, City & State spoke to some experts from a variety of sectors on the potential effects. We spoke to Kathleen Hall, revenue analyst, Independent Fiscal Office, Melissa Bova, vice president of government affairs, Pennsylvania Restaurant & Lodging Association, and David Masur and Ashleigh Deemer, executive director and deputy director of PennEnvironment, respectively. They each offered perspectives on how different single-use plastic policies could affect consumers, businesses and the environment. 
 

The Independent Fiscal Office conducted a report on the potential economic impact of single-use plastic bag regulations back in 2020. Can you describe what that report found? 

KH: First, we looked at baseline usage and we established that currently, Pennsylvania uses about 4.5 billion bags, of which 3 billion would be the typical kind of thin, plastic grocery bag. Then we looked at three different scenarios: a ban, a fee, and then a ban plus fee. Under the ban [and ban plus fee] scenario, we had considered that thicker plastic bags would be allowed to be used as an option. Some bans moving forward in cities like Philadelphia are limiting blown film extrusion bags, and that means those heavyweight plastic bags wouldn’t be allowed so that’s a little different than our report. But we found that the ban plus fee reduced bags the most. It would eliminate the demand for roughly 3 billion plastic lightweight bags, but then it would also increase the demand for paper and thicker plastic bags as well as reusable bags. 
 

Although it’s still too early to see benefits in Pennsylvania, have you heard from any residents or municipalities about the initial impacts of the bans in places like Philadelphia and West Chester?

MB: We know businesses are working to comply, but the biggest issue that we're finding is transitioning to an approved type of bag for takeout. Because the supply chain is such an issue right now, it's hard for businesses to get products that comply with the ban … For us to provide reusable bags, that’s really an increased cost. The requirement of having a certain thickness to be in place on that end, you just don’t have as many manufacturers making those types of bags in the volume that the industry needs. So, it’s more of an inability to find the bag that would be compliant under the law.

DM: As part of the transition, businesses have to post signage stating that this was coming. Even local corner stores and bodegas do it. Tiny corner convenience stores in South Philadelphia have them up and I was so impressed by that … Certainly, because of who we are, when people don’t like policies they are not shy to let us know in emails. I feel like we haven’t really gotten any of those calls or emails from the cities that have passed bans, and I think that’s a real tribute to the fact that the public knows these are changes for the greater good. 

AD: Nobody you talk to loves plastic bags. Everyone has a story about seeing plastic bags caught in trees or collecting like tumbleweeds in the business districts, so I think this is a really welcomed change. Even the Post-Gazette editorial board recommended a bag ban unprompted, so I really think this is a policy people will be glad to see implemented here, too.
 

Do you see the costs associated with a ban or ban plus fee falling onto the consumer, retailers, or a combination of the two?

KH: We estimated that under both the ban and ban plus fee scenario that this would increase consumer costs. We found the fee option to be most efficient in our analysis because it motivates a strong consumer response but it also allows retailers to provide the lowest cost bag option which is lightweight plastic bags, which are much less expensive than traditional replacements. We assume that currently, consumers are likely paying for these bags implicitly in prices and that under a fee scenario the price was explicit so that consumers are faced with the decision of whether that’s worth it to them at that price … In our analysis, we looked at retailers almost like a middleman, that they would either pass on additional costs to consumers through prices or they would also pass on additional savings to customers through lower prices. In reality, there is probably self-absorption on both ends. Retailers are likely to try and absorb costs to try and keep prices low, and on the other hand, if they were making net savings from a fee revenue they might retain some of that as profit. 

MB: Restaurants operate on a 4% profit margin, so they can’t absorb any additional costs. The cost of something like this would have to be applied to the consumer. It would have to be an extra charge or built into the price of to-go food or to-go packaging. 

DM: We, as consumers, have always paid for the paper or plastic bags, it’s just hidden into the price of the goods on the shelf. So, I think we have paid and will continue to pay for them. There’s no market incentive to stop our behavior as consumers, so that’s why I think in some places when they do a fee on bags, when you have to pay for something directly as a consumer, your decisions change. That’s the value of adding the fee on paper onto the ban on plastic bags … We certainly have empathy for small businesses and have to be cognizant of those things. The economic reality of it is the change is minuscule. The average price of a plastic bag is one to three cents and for paper bags it’s three to seven cents. I think restaurants, much like grocery stores, had that in their price of doing business. That’s included in the price for the food. I don’t pay less for a burger when I don’t use ketchup packets … They should figure out how to work within those parameters, but it shouldn’t be a significant economic change when you look at the price of the product we’re referring to. And the price of that, I would argue, is small given the environmental benefit.
 

Do you see restaurants being more impacted as they still rely heavily on takeout orders during the pandemic?

MB: There’s inherently a difference between a business that does quick-service operation where all they do is takeout and an operation that has more in-house dining. So, I think for each business, that would impact how they handle it. At the end of the day, it would depend on the restaurant itself, but no matter what the cost [it] would have to be passed along to the consumer in one form or another … For the foreseeable future with COVID, takeout is going to be a big part of the industry. There’s a reason Philadelphia delayed its enforcement of its ban. We really would like to work with the government so restaurants can still survive without any extra costs put on them. 
 

Did you find any extra costs going towards consumers that rely on plastic bags at home for pet waste and trash bin liners?

KH: We did see that in our research and we adjusted for that in our analysis. We found that under a ban or ban plus fee scenario, the demand for trash bin liners or things that people are using lightweight plastic bags for would be about a $13 million to $20 million cost increase for consumers, $13 million under a ban scenario and $20 million under a ban plus fee scenario just to replace those bags they would have access to for free at a grocery store. 
 

Based on the information available about a ban, a fee, and a ban plus a fee, what do you think is the best policy, taking into account the impacts on consumers, businesses and the environment?

KH: The two key assumptions included in our report are that retailers pass bag costs forward to consumers through higher prices but they will also pass on cost savings with a marginal absorption on either side. We decided the fee would be the most efficient option and that was because it places a price on an item that most consumers view as free at the moment, even though it might be implicitly paid for through prices at the register. Putting a price on a plastic bag allows the retailer to provide the lowest cost option, but it also allows the consumer to make a decision about how valuable a bag is to them. We did a survey of Pennsylvanians as part of our study and we found about 70% of Pennsylvanians surveyed value a bag at zero cents or less, so that informed some of our findings. 

MB: I don’t know if we have a position, but for us, I think a fee makes sense. With a ban, no matter what, you’re going to have winners and losers. You’re going to have low-income households that are going to be at a disadvantage if you’re assessing a fee or requiring reusable bags and the investment that comes with that. But also, at the end of the day, we have 2,500 municipalities in Pennsylvania. So in terms of compliance for people that have multiple locations, if we have different variations of bans from county to county, that’s a concern we have. 

AD: Research shows that the more effective combination is the ban on plastic bags and fee on paper bags. That hybrid policy ensures we’re getting plastic bags out of our waste, rivers and streams, and the fee on paper influences consumer behavior in such a way that people will start using reusable bags more. There’s plenty of evidence out there.