deposit-refund system

{{Short description|Surcharge refunded when part of a product is returned}}

File:Schematic_of_a_Norwegian_style_Deposit_Return_Scheme.png

File:Victorian Container Deposit Scheme Returns Facility.jpg

A deposit-refund system (DRS), also known as deposit-return system, advance deposit fee or deposit-return scheme, is a surcharge on a product when purchased and a rebate when it is returned. A well-known example is when container deposit legislation mandates that a refund is given when reusable packaging is returned. A DRS is a market-based instrument to address externalities, similar to a pigovian tax, with the key difference that a DRS refunds the fee after the product is returned.{{cite web |url=http://www.rff.org/RFF/Documents/RFF-DP-11-47.pdf |title=Deposit-Refund Systems in Practice and Theory |last=Walls |first=Margaret |date=November 2011 |work=RFF DP 11-47 |publisher=Resources for the Future |accessdate=22 August 2012 |archive-url=https://web.archive.org/web/20140801101423/http://www.rff.org/RFF/Documents/RFF-DP-11-47.pdf |archive-date=1 August 2014 |url-status=dead }} This provides an incentive to consumers to properly dispose of a product.

While most commonly used with beverage containers, DRS can be used on other materials including liquid and gaseous wastes.{{cite journal |last=Fullerton |first=Don |first2=Ann |last2=Wolverton |title=Two Generalizations of a Deposit-Refund System |journal=American Economic Review |year=2000 |volume=90 |issue=2 |pages=238–242 |doi=10.1257/aer.90.2.238 |url=http://www.nber.org/papers/w7505.pdf }} A DRS is used on products such as batteries, tyres, automotive oil, consumer electronics and shipping pallets.

There are three potential advantages of a DRS: it reduces illegal dumping by giving a financial incentive, it makes monitoring and enforcement easier, and evading the costs is difficult.

DRS is said to be based on the principles of Extended Producer Responsibility.{{Cite journal |last=Gupt |first=Yamini |last2=Sahay |first2=Samraj |date=2015-06-01 |title=Managing Used Lead Acid Batteries in India: Evaluation of EPR-DRS Approaches |url=https://doi.org/10.5696/i2156-9614-5-8.52 |journal=Journal of Health and Pollution |volume=5 |issue=8 |pages=52–63 |doi=10.5696/i2156-9614-5-8.52 |issn=2156-9614|doi-access=free |pmc=6221476 }}

DRS can be either voluntary or mandated by legislation.