Can the Market Decide? A Law and Economics Analysis of Models of Legislation Banning Plastic Bags

Pollution of the environment by plastics, especially the oceans, streams and water bodies, has emerged as one of the most pressing environmental issues of our time. Attempts to craft laws aimed specifically at reduction for environmental purposes of the consumption of lightweight shopping bags are a relatively new phenomenon worldwide and as yet there is no consensus on the most effective legislative response to the environmental issue. Law and Economics (L&E) provides a theoretical framework through which to consider the likelihood of success of the currently predominant Australian model of the legislation – a retail ban on lightweight plastic shopping bags. This article constructs the appropriate L&E framework for this challenge and then analyses within it the predominant Australian model of legislation directed to banning or reducing the sale of single use plastic bags, with particular focus on that adopted in the Australian Capital Territory. The Plastic Shopping Bags Ban Act 2010 (ACT) was developed and implemented in response to growing environmental concern about the disposal of lightweight plastic shopping bags found in landfill and litter. Similar to States and Territories across Australia, the Australian Capital Territory (ACT) legislation makes it an offence for retailers to supply lightweight plastic shopping bags to customers for the purpose of carrying goods brought from the retailer. Empirical evidence shows that the legislation has been effective in reducing the prevalence of lightweight bags in landfill and litter. However, evidence is also pointing to a change in consumer behaviour in which consumers are turning to potentially more harmful substitutes, such as greater consumption of thicker plastic bags and non-banned lightweight plastic bags to supplement consumer needs. This shift in consumer behaviour poses the danger of negatively impacting the success of the Plastic Bag Ban legislation. This legislative approach is compared with alternatives offered by the L&E framework such as supply-side taxation or demand-side levies. This L&E analysis demonstrates that the legislation left in its current form may lead to greater negative environmental impacts and there is evidence to suggest that this is already occurring. It is therefore recommended that the current model of the legislation be reformed to include a legislative levy on the retail of thicker plastic bags in conjunction with the continued wholesale ban on lightweight plastic bags. In the course of this study a critique is made of L&E theory and policy approaches generally adopted in the course of governmental development of environmental legislative packages in Australia.