Determining Recycling Fees and Subsidies in China’s WEEE Disposal Fund with Formal and Informal Sectors

Abstract

At present, most of China’s waste electrical and electronic equipment (hereafter referred to as WEEE) flow into the informal recycling sector, which has no official disassembly certification. To regulate the WEEE recycling industry, the policy of the WEEE disposal fund has been implemented to levy recycling fees from producers and subsidize the formal recycling sector. This paper aims to solve the challenging problem of how to optimize recycling fees and subsidies. We first study the competition between the formal and informal sectors, and construct the game models of the dismantling and refurbishing processes. Based on the equilibrium outcomes, we then examine the impact of the disposal fund on producers, as well as the formal and informal recycling sectors. With the goal of maximizing social welfare and maintaining a balanced budget for the disposal fund, we study the optimal recycling fee levied on producers and the corresponding subsidy provided to the formal sector. Social welfare is a function of producer and formal-recycler profits, consumer surplus, and the negative externality caused by informal dismantling and refurbishing, such as environmental pollution and safety problems. Results show that the use of subsidy can increase the acquisition quantity of used products in the formal sector, but the increase will slow down with higher subsidy. If the recycling fee that producers are charged is small, social welfare will be improved. In addition, as the fee is increased, social welfare will rise first and then fall. As such, any excessive increase in recycling fees should be avoided.

Advanced Recovery Techniques for Waste Materials from IT and Telecommunication Equipment Printed Circuit Boards

“…According to the predictions made in the work of Baldé et al [6], the total quantity of WEEE will exceed 50 million tons by 2021. WEEEs contain many materials of high economic value, but they also represent possible environmental threats in the case of unregulated disposal processes [7]. At the same time, WEEE recycling constitutes one of the most important secondary raw materials sources.…”

Waste Electrical and Electronic Fund Policy: Current Status and Evaluation of Implementation in China

“…To solve the aforementioned problems and standardize the WEEE recycling industry, China has implemented the WEEE disposal fund policy, charging recycling fees from producers to subsidize the formal recycling sector. Specifically, the dismantling of electronic products must be scrutinized by environmental authorities, while dismantling certificates should be issued by formal recycling departments [ 43 ].…”

Sensitivity Analysis as a Tool in Environmental Policy for Sustainability: The Case of Waste Recycling Projects in the Republic of Serbia

“…In the field of WEEE, one of the biggest challenges is the creation of an optimal package of financial support from the state, which is essential for maintaining the continuity of the e-waste recycling process. Research in China [27,28] indicates potential problems that arise when official recycling centers do not have sufficient financial support from the state. In such conditions, most of the daily generated e-waste ends up in illegal recycling centers where it is recycled in conditions that are not in accordance with the basic principles of environmental protection.…”

“…In such conditions, most of the daily generated e-waste ends up in illegal recycling centers where it is recycled in conditions that are not in accordance with the basic principles of environmental protection. In this context, Lui et al [27] point to the essential role of subsidies in the recycling of WEEE, especially refrigerators, and test the switching values of this parameter in terms of profitability of the whole process. Their results show that "the use of subsidies can increase the acquisition quantity of used products in the formal sector, but the increase will slow down with higher subsidy" [27].…”