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Product Stewardship: Incorporating Incentives for Design for Environment PSI Forum – June 2009

Product Stewardship: Incorporating Incentives for Design for Environment PSI Forum – June 2009. Pamela Brody-Heine Eco Stewardship Strategies. What is Design for Environment ( DfE )?.

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Product Stewardship: Incorporating Incentives for Design for Environment PSI Forum – June 2009

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  1. Product Stewardship: Incorporating Incentives for Design for EnvironmentPSI Forum – June 2009 Pamela Brody-Heine Eco Stewardship Strategies

  2. What is Design for Environment (DfE)? “Design for Environment (DfE) is a general concept that refers to a variety of design approaches that attempt to reduce the overall environmental impact of a product, process or service, where environmental impacts are considered across its life cycle.” Wikipedia Eco Stewardship Strategies

  3. Product Stewardship Definition • “Product Stewardship" is a principle that directs all those involved in the life cycle of a product to take shared responsibility for reducing the health and environmental impacts that result from the production, use, and end-of-life management of the product. Eco Stewardship Strategies

  4. Where Does DfE Fit into Product Stewardship? • Product stewardship has traditionally focused on end-of-life (EOL) management • Assumed that DfE incentives were embedded in product stewardship/producer responsibility programs, and would be effective • Open question - does producer responsibility (for EOL) truly incentivize DfE? • Most can agree that DfE incentives could be improved! Eco Stewardship Strategies

  5. How? • Question facing the Oregon DEQ as they drafted their Product Stewardship Framework legislation • Small research effort -Design for Environment Incentives: Opportunities within Oregon’s Product Stewardship Framework • The Project Team • Pamela Brody-Heine/Eco Stewardship Strategies • Wayne Rifer/Rifer Environmental/Green Electronics Council • Neha Patel Eco Stewardship Strategies

  6. Research Purpose & Questions • Research purpose – to explore incentive mechanisms the can be used by government to motivate producers to implement improvements in the environmental design of products. • So, we asked the following questions: • Where is DfE explicitly included in product stewardship legislation, programs and/or systems? • How is the incentive structured? • Is the incentive working? Eco Stewardship Strategies

  7. Not So Many…Product Stewardship Programs with DfE Incentives • Stewardship Ontario - Ontario's Waste Diversion Act • Green Dot, Packaging Recovery Organization (PRO) Europe • U.K. Waste and Resources Action Program (WRAP) Retail Innovation Program • European Union Integrated Product Policy (IPP) Pilot Projects • European Union Eco- Design Directive for Energy Using Products (EuP) • Massachusetts Toxics Use Reduction Act (TURA) • Oregon Toxics Use and Hazardous Waste Reduction Program • California Green Chemistry Initiative • City of San Francisco Regulation Determining Acceptable Alternatives to Arsenic Treated Wood • Illinois Electronic Products Recycling and Reuse Act (SB2313) Not an exhaustive list! Eco Stewardship Strategies

  8. Found Other Examples… • Contract specification examples such as: • Federal government EPEAT requirement • King County recycled-content paper • South Korea packaging design criteria • Price preference examples such as: • State of Alaska recycled-content products • King County recycled paper products and re-refined lubricating oil • Eco-Labels and Certifications such as: • EPEAT • Ecologo Eco Stewardship Strategies

  9. Effective Incentive Mechanism Must provide three essential functions: • Environmental Improvement Objectives – Clearly define the objectives; the desired outcome in terms of specific improved product environmental performance • Measurement Method – Provide a method of measuring the product characteristics, or the producer’s behavior, in relation to the environmental improvement objectives • Motivational Reward – Institute a set of conditions or consequences that will motivate the producer Eco Stewardship Strategies

  10. Types of Mechanisms to Incent Producers to DfE • Direct Benefit – A financial or other benefit/liability that directly accrues to the producer • Indirect Benefit – A financial or other benefit that is a consequence of improving environmental design, but does not accrue directly to the producer • Marketplace Benefit – An advantage (or disadvantage) in the volume of sales or price • Reputational Benefit – An enhancement of (or detraction from) the producer’s reputation • Threat of Legislation – Avoidance of law or regulation

  11. Incentives for Motivating Improved Environmental Design Based on this research, these incentives have demonstrated the greatest potential: • Green purchasing (marketplace benefit) • Differential product fees (direct benefit) • Stakeholder engagement (reputational benefit) • Reporting/disclosure (reputational benefits) • Eco-labels/certifications (marketplace benefits) Eco Stewardship Strategies

  12. Green Purchasing • Promote green purchasing throughout the state government, higher education, and public and private institutions. • Government purchasing could call out specific desired product characteristics or rely on eco-labels. Eco Stewardship Strategies

  13. Green Purchasing - Example Eco Stewardship Strategies

  14. Differentiated Fees • A variable fee structure • Needs to be logically traced to an incentive • Often linked to activity based costing (cost to recycle, recovery amounts, etc.) and/or types and quantity of material used • Could also be linked to use of an eco-label, degree of transparency in reporting or ingredient disclosure, commitment to a voluntary agreement on DfE Eco Stewardship Strategies

  15. Differentiated Fees - Example Eco Stewardship Strategies

  16. Stakeholder Engagement • Voluntary stakeholder processes to develop voluntary agreements for design and manufacturing improvements (e.g. substance restrictions, reporting and disclosure requirements) • Incentivize manufacturers to improve DfE by exposing their design decisions to the light of day • Could be coupled with differentiated fees Eco Stewardship Strategies

  17. Stakeholder Engagement - Example Eco Stewardship Strategies

  18. Reporting through Disclosure, Eco-Label or Certification • Producers provide information to consumers regarding the environmental characteristics of their products • Include reporting through mandatory disclosure, or use of an eco-label or product certification • Market will then incentivize the production and design of environmentally preferable products Eco Stewardship Strategies

  19. Reporting through Disclosure, Eco-Label or Certification - Example Eco Stewardship Strategies

  20. An Opportunity for the Product Stewardship Community • Expand on the research – perhaps there are more examples and opportunities for DfE incentives • Look for ways to include DfE incentives in legislation and programs Eco Stewardship Strategies

  21. Contact Pamela Brody-Heine Eco Stewardship Strategies pamela@brodyheine.com 541-633-7254 Eco Stewardship Strategies

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