Finance seminar - Assistant Professor Jordan Moore - Rowan University

A seminar by Assistant Professor Jordan Moore from Rowan University

Title: Deposit Return Legislation and Derivatives on Recycled Materials: A Market-Based Path to Higher Recycling Rates

Abstract: Only about half of recyclable material in the United States is recycled, an inefficiency with substantial economic and environmental costs. Two approaches raise recycling rates. The first is financial markets for recycled materials, which can give buyers and sellers more price transparency and certainty. The second is legislation, particularly deposit return schemes (“bottle bills”). Proposed bottle bill legislation often fails, however, because of opposition from industry groups, who point to forgone income from container deposits and to lower revenue from the lower-grade material left in curbside recycling streams. We show how contracts that compensate these stakeholders for such losses can be structured and priced as derivative securities written on recycled-material prices, using the Plastic Recycling Corporation of California (PRCC) as an illustrative case. These derivative securities could lower the political barriers to deposit return legislation and, in turn, raise recycling rates.

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