E-Can-Omics: The impact of raised deposits

Everybody knows the saying, “One man’s trash is another man’s treasure,” but few people embody this idiom better than Connecticut’s bottle collectors. Robert Cardone, 22 of New Haven, for example, said he makes as much collecting bottles each day as he does working full-time at Target.

“I tried it one time and made like $70,” said Cardone. “I’ve been making that much since, so I just keep on going.”

Cardone was one of a handful of collectors outside of the Stop & Shop on Whalley Ave in New Haven waiting to exchange their cans and bottles for nickels and dimes when approached by Inside Investigator. Cardone, who began collecting bottles just three months ago, is one of a growing number of people who have taken bottle redemption more seriously since the state’s bottle bill deposit increased from 5 cents to 10 cents earlier this year.

Bottle bill proponents have argued that strengthening the bottle bill would enrich the state’s economy while incentivizing higher rates of redemption. Ideally, consumers would be happy to get more money back for redeeming their bottles, the state would get help reaching its goal of an 80 percent annual redemption rate.

While prior reporting has shown that the increase in redemption rate thus far has been “ mixed, ” optimism for the future seems to be shared amongst the state’s bottle collectors, redemption centers, and bottle bill stakeholders.

Raising the bottle deposit from 5 to 10 cents was just one element of Public Act No. 21-58 that went into effect in January 2024. The law also raises the handling fee, a charge that beverage distributors pay to grocery stores and bottle redemption centers for compiling their cans and bottles in one place to be redeemed. Before the reworked bottle bill was passed, redemption centers and grocery stores received 1.5 cents for each beer can redeemed, and 2 cents for other beverage containers. As of October 2021, beer cans, malt beverage containers, hard seltzer and cider cans now net redemption centers 2.5 cents per can, while all other containers net them 3.5 cents per can.

Chris Nelson, an Environmental Analyst for Connecticut’s Department of Energy & Environmental Protection (DEEP) said that increasing handling fees has been a topic of discussion for several years. As the state saw the closure of redemption centers, DEEP heard from many operators who communicated that the previous handling fees of 1.5-2 cents just weren’t high enough to keep the lights on.

“We were hearing from a number of redemption center operators, ‘You know, what we get paid now for the handling fee is not enough to help us cover the costs,’” said Nelson. “Our handling fees had not increased whereas other states had, so we had fallen behind.”

Thus far, the increased handling fee, as well as the release of $5 million in grant funding to redemption centers, another measure included in the bill, have successfully encouraged the opening of new redemption centers. While DEEP did not have a complete list of how many new redemption centers had opened since the increased fees or release of funding, it did provide a list of grant funding recipients that showed funding was released to four newly opened redemption center businesses located in Bristol, Torrington, Killingly and Enfield. It also included one newly opened applicant that didn’t receive funding, the Three Veterans bottle redemption center in New Milford.

“Unfortunately, by the time we had put the grant together the funding had sunset,” said Lynn Little, operations manager of Three Veterans’ redemption center. “We were a little late to the game.”

Before Three Veterans opened in July, Little said she managed the New Milford Recycling Center. The Recycling Center was originally operated by the Town of New Milford, but the Town subcontracted its management out to Three Veterans, LLC in October 2020. While the Recycling Center did not initially act as a redemption center, Little said several factors in the reworked bottle bill made opening one an attractive proposition.

“It was absolutely a catalyst for us,” Little said of the bill. “It wasn’t just that the deposit rate doubled, it’s that the amount of things that were being charged a deposit doubled.”

The expanded number of beverage containers added to the redeemable category under the revised bottle bill include hard seltzers, hard ciders, plant waters, juices and juice drinks, teas, coffees, kombuchas, plant-infused drinks, sports drinks and energy drinks.

Little said that before opening the redemption center, she would often ask customers at the Milford Recycling Center why they were throwing away their redeemable bottles and cans there, instead of bringing them to a redemption center for cash. Little said that they would typically list complaints about the inconvenience associated with returns, such as the long lines at grocery stores or their oft-broken machines.

“They just had every complaint in the book why they didn’t want to do it, it wasn’t convenient,” said Little. “And so, once we put two and two together, we were like, we can make it super convenient, let’s do that!”

Suzan Collins, President of the Container Recycling Institute, was instrumental in helping to shape Connecticut’s bottle bill, serving in an advisory capacity during its drafting. She said that the bottle bill’s job-creating potential is one of its “best economic impacts.”

“Regenerating that material resource has economic impact, business growth value, job growth value, and those things have been documented in several different studies,” said Collins.

Collins noted a study conducted by Reloop, an environmentalist non-profit organization that focuses on recycling. The study, released in 2022, attempted to model the economic impacts that implementing a fully modernized deposit return system (DRS) would have on five states in the northeast, including Connecticut. The study projected that through modernizing its DRS, as the state has taken steps to do in its recent bill, Connecticut could stand to add 381 jobs, $31-64 million in state revenue, and $93 million in gross value added. Gross value added is a metric that examines a region’s gross domestic product, the measure of all products and services produced in an economy, plus its subsidies on products while subtracting its taxes on products.

While the impact of the bottle bill on redemption rates and the opening of redemption centers is relatively straightforward, it’s more difficult to put a finger on how customers are spending the extra money. Regardless, both the anecdotal experiences of bottle collectors and redemption center employees, as well as conclusions drawn from a few studies on the subject, help to shine a light on which individuals and economic sectors may benefit the most from Connecticut’s strengthened bottle bill.

Michael Hansen, 65, is the longest-tenured employee at the West Haven Bottle Redemption Center. Hansen said that he has been working at the Redemption Center for seven years and that he’s seen a day and night difference in the number of people who come to redeem bottles since the deposit has risen.

“We have our regulars that we’ve been seeing for 10 years, but now we’re seeing different people, people that we haven’t seen before,” said Hansen. “We’re seeing people that, normally, probably would give it to the people that we see all the time.”

Collins said that when states raise their deposits, it typically incentivizes people beyond the lowest-income brackets, who are usually the most reliable redeemers, to take redemption more seriously. Collins said she spoke with a journalist from Resource Recycling , a recycling trade magazine based out of Oregon, who told her that 5-cent deposits weren’t enough to get her to redeem, but when Oregon raised its deposit to 10 cents, she would go all the time. Little’s observations echoed Collins’ sentiment.

“I’ve had many customers say to me, ‘Oh, when it was five cents I didn’t care,’ but now that it’s 10 cents, you know a twelve-pack of soda is $1.20, that adds up,” said Little, who herself admitted to not returning her bottles before the deposit was raised. “Now that it’s up to 10 cents, you know my kids go to throw their soda away and I’m like, ‘What are you doing!?”

While both experiences may only be anecdotal evidence, Collins also pointed at Oregon, a 10-cent state that had a 90.5% redemption rate in 2023, to enforce her point.

While the rise in deposits may incentivize more middle- and upper-class residents to redeem bottles, Collins said that the raised bottle bill likely still has its highest impact in low-income communities. Collins cited two studies conducted by Professor Bevin Ashenmiller of Occidental College in Los Angeles. Ashenmiller conducted two studies, one in 2010 and a follow-up study in 2011 , evaluating the impact of California’s bottle bill on its residents. Collins said that Ashenmiller split up the bottle redeemers in her study by income bracket and concluded that redeemers of the lowest bracket stood to gain the most via collection.

“The fact that they did collection of bottles and cans on the side meant that they were able to bring in, I think it was 25% additional income,” said Collins. “So, if they were making $100, this was bringing them like an extra $25, and so for those people on that end of the spectrum of income, it’s incredibly meaningful to have this as an opportunity to bring in more income, right?”

Ashenmiller’s 2010 study went as far as to suggest that implementing bottle bills could potentially lower petty crime in impoverished communities. Ashenmmiller found that city-wide petty crime rates averaged 11% lower crime rates than cities in non-bottle bill states. In addition to adding a source of income to bottle bill states’ lowest-income residents, Collins also said that the increased incentivization to recycle has the potential to clean up lower-income communities, which she said typically have the worst accumulations of litter.

“Beverage container deposit laws encourage people to not litter, because they want to keep the container and take it in for a nickel, or if it is littered, somebody else would come and pick it up and take it in for the nickel,” said Collins. “So that’s an impact that’s felt across all communities, but it’s something that can help clean up litter in communities that have the worst accumulation of litter.”

Hansen’s own observations also reinforce the notion of the bottle bill’s significance to low-income residents. Hansen said that many of West Haven Redemption Center’s most reliable customers over the years have been those toeing the poverty line.

“A third are alcoholics, a third are drug addicts, and a third are, for lack of a better phrase, normal people,” said Hansen. “I don’t want that to come out wrong, but that’s the way it is.”

Whalley Ave’s Stop and Shop collectors surveyed by Inside Investigator stated a variety of uses for the bottle deposit funds; Cardone said he mostly tried to save his deposit money. William Green said he spends his deposit money primarily on cigarettes. David, another collector who didn’t wish to give his last name, said he spent his money primarily on lottery tickets, but would also spend it on food and drinks. Another collector, who only wished to be identified as Mark, said that he spent his on “whatever he needs it for,” and gave food, bus fare, or cigarettes as examples.

“It helps people you know, people with no means,” said Mark of the raised deposit. “If you need a couple dollars, now you only have to get ten cans whereas before you’d have to get twenty, so it definitely helps out.”

Green, who holds onto his bottles at home and occasionally fetches bottles off the street or goes to redeem his sister’s, said that the raise has made him a more conscious bottle saver.

“I started collecting during COVID, I started seeing a lot of bottles everywhere, so I started picking them up,” said Green. “Then when it went to 10 cents, I really started to save them.”

Little’s conversations with customers revealed some especially wholesome expenditures of return money.

“I have one family who comes in and all of the deposit money that they get goes into a jar for a trip that they’re planning for next year at Disney,” said Little. “I’ve had kids come in and they want to go buy their LEGO sets or a new pair of headphones. I have one lady who comes in, an older lady, she donates all of her deposit money to Alzheimer’s research. I think it’s great.”

Collins said that another sector of the economy that stands to benefit, beyond recycling and redemption centers, are grocery stores themselves. Collins cited a study conducted by the New York Public Interest Research Group which surveyed 1,100 people at the bottle returns of 96 different stores across New York State. 68% of the respondents said they would be shopping at the grocery store after their returns, and 56.7% said the convenience of bottle return systems factored into their choice of store. Collins predicted that stores might especially value their bottle returns in the “age of Instacart.”

“Having a reason for people to return to the store, to return their containers, is a way to get people in the door,” said Collins.

Collins pointed to Oregon as a state in which the value of deposit programs to grocery stores is most evident. Oregon has a Green Bag redemption program, in which collectors fill designated bags full of redeemables and leave them in a drop vault instead of feeding them one-by-one into reverse vending machines. Collins said that many stores which have bag drop off vaults have begun offering in-store discounts on items purchased with deposit money.

“The stores so value having people come in and spend their bottle drop money in the stores that the big retailers offer a 20% bonus,” said Collins. “So, like I said, that’s not a study, but it’s a big clue that it benefits the stores so much that they want to encourage you to do that.”

Perhaps the trickiest fiscal impact of the bottle bill to determine is how effective it has been, or will be, as a state revenue stream.

Under Connecticut’s original bottle bill, passed in 1980, 100% of unclaimed deposits, or deposits taken out on bottles that were sold yet not redeemed, were paid back to the distributors. Upon a reworked bottled bill in 2009, 100% of the deposits were paid back from distributors to the state’s General Fund. The 2021 bill adopted a mixed approach; in 2023, 95% of unclaimed deposits went to the General Fund, and in 2024, only 65% of it will enter the General Fund. From 2025 and onwards, 55% of the remaining deposits will enter the General Fund, with the remaining percentage being returned to distributors.

“I used to calculate that, and it was just estimated based on what the difference was [of bottles sold], and how much we were estimating was not paid out,” said Nelson. “But the formula has changed because now a portion of it goes back to the deposit initiators, and a portion of it goes to the General Fund. So, I haven’t gotten to the point where I’ve updated my ability to kind of estimate that, because it’s been kind of a moving target.”

While DEEP used to oversee calculating the money deposited into the General Fund, that job has now been transferred to the state’s Department of Revenue Services (DRS). According to the DRS numbers, as of June this year, the General Fund has received $24.8 million in unclaimed deposits. These numbers roughly match DEEP, whose officials reported $24,777,082 in unclaimed deposits.

Per DEEP’s redemption statistics, there has been an 8.5 percent jump in quarterly redemption rates from December 2023 to June 2024. The jump in redemption rates in summer months, which Nelson said typically yield the highest return rates, is even more significant; going from 42.3% in 2023 to 59.9% in 2024.

“It’s having an impact,” said Nelson.

By the same time last year, $18,725,643 in unclaimed deposits were transferred to the General Fund. So even though the General Fund stands to receive 30% less unclaimed deposits in 2024 than it did in 2023, the doubling of the deposit amount and the increased rate of redemption have bumped the total revenue received by the state up by 32%.

While the doubled deposit and increased redemption rate may be enough to make up for the increased share of unclaimed deposits given back to distributors this year, that share is only set to increase in future years. Revenue however is a side-effect of the bill; its main objective isn’t to raise funds, it’s to increase the state’s redemption rate to 80% each year. The higher the redemption rate rises, the more money ends up in the hands of collectors, and the less in the state’s coffers.

Ultimately, while the doubling of deposits and the expansion of redeemables increases the total amount of revenue the state could potentially gain, the further reduction of the state’s share of unclaimed deposits (from 65% this year to 55% next year and onwards) and an expected increase in redemption rates will make it so that the state will likely see a significant reduction in revenue in the years to come. The extent to which that reduction in revenue will be the result of significantly increased redemption, however, may take some time.

Nelson said that Collins told him it’s “typical” for significant increases in redemption to take a few years after bottle bill implementation, as it takes time for consumers to learn the ins and outs of the new law.

“It takes kind of a couple years for that to kind of really have an overall impact,” said Nelson. “It takes a while sometimes, I think, for that knowledge and behavior change to sink in across the board.”

Little’s experiences with customers at the recycling center, prior to the Three Veterans opening, reinforced Nelson’s observation on consumer awareness of the bottle bill. Little said that after the passage of the bill, she noticed customers at the recycling center bringing in bottles that were now redeemable, not knowing they were now included under the expanded list of redeemables. Little said she would ask customers if they knew the worth of some of the bottles they were turning in, and that “nobody knew” what was now worth a deposit under the expanded coverage of the new bill.

Little’s experience noting a lack of consumer awareness around the bill is not a one-off. Cardone himself told Inside Investigator that he “never knew” the 10-cent deposit used to be only 5 cents when he started collecting. The lack of awareness highlights perhaps the most onerous aspect of the bill; the lack of an educational element. The bill currently places the onus of consumer education on grocery stores and beverage distributors, without any funds being allocated towards state promotion.

“I think education really is the biggest thing right now,” said Little. “So many people are unaware of what carries a deposit in Connecticut. You know, the bottle bill in Connecticut was water and beer and whatever it included for so long, and this is such a big expansion, I think more people need education.”

Collins said that when Hawaii first implemented its bottle bill in 2005, the state polled residents on their knowledge of the program. After its survey, the state funded a public awareness campaign for the program and then re-surveyed residents. Collins said the province of British Columbia in Canada, which routinely boasts redemption rates hovering around the 80%-mark, resurveys residents’ bottle bill awareness every two years.

“You do that kind of research and then you keep researching, and keep adjusting your public education activities, until you get pretty much universal awareness within the jurisdiction,” said Collins. “If there was one thing we could have gone back in time and worked into the bill, we would have given DEEP funding for public education.”

Little seems to have taken the bill’s clause of business-owner led education of consumers seriously. She said that she sent mail out to area residents that explained which containers are eligible, and that she has passed out flyers every day for residents to place near their recycling as reference sheets.

“You’re never going to hit 80% if people only know 50% of what you’re charging,” said Little.

Beyond a lack of consumer education measures, liquor bottles are another noticeable exclusion from the bill, specifically 50-milliliter nip bottles. While the original bill language included liquor and wine bottles, heavy pushback from liquor and wine distributors and retailers led to legislators shelving their inclusion.

Many retailers, which would have originally been mandated to redeem bottles from their stores, testified before the General Assembly that their storefronts did not have the space to hold onto empties. Distributors testified that costs to their industry would be unjustly high. They also argued that the lack of reverse vending machine compatibility, and the variety of shapes and sizes of liquor bottles, would make them difficult to process.

“Unlike, beer, soda or water containers, wine and spirit containers come in a variety of sizes, shapes and weights, making it much more difficult and cumbersome to pick up, store and, for the consumer, redeem,” reads the written testimony of Lawrence Cafero Jr., Executive Director of Wine and Spirits Wholesalers of Connecticut. “There is also no “reverse vending redemption machine” that currently exists, capable of accepting wine, spirit or miniature containers.”

Collins pointed to other states that include liquor and wine bottles in their bottle bills, such as Maine, Vermont, California and Iowa, to show that it is a measure capable of being done in Connecticut.

“I could go on with all the different places that include wine and liquor,” said Collins. “The distributors were successful, and I guess have been successful for the whole 40 years of the program in Connecticut, in not taking on responsibility for their packaging.”

Nelson echoed Collins’ sentiment. He highlighted the litter issue that nip bottles in particular pose to Connecticut, a state which he said sells 95 million nips per year, the highest per capita sales number of any state in the country.

“I think the technology is not the reason for this not moving forward, right now I think it’s the industry trying to avoid minis being pulled in,” said Nelson. “The wine and spirits industry has lobbied hard to keep them out and they’ve been successful.”

To further reinforce his point, Nelson said that DEEP has spoken with reverse vending machine manufacturers, who indicated an interest in the development of machines capable of processing nip bottles so long as there was adequate demand. If a 10-cent deposit were to be included on nip bottles, Nelson thinks demand would be through the roof.

“The people who consume the minis may not be the ones who redeem them, but I tell you, if you put a 10-cent deposit on those, there will be people picking them up off the side of the road to redeem them,” said Nelson. “It certainly would have a huge impact in reducing the mini or nip bottles ending up as litter on the side of the road.”

The Whaley Avenue bottle collectors agreed wholeheartedly.

“When I’m walking the street, I’ll find bags full of them, they’ll be all over,” said Cardone about the nip bottles. “I think it’d help keep the area clean, and you could also make money at the same time, so it’s a win-win I guess.”

As of now, the bill only introduced a 5-cent surcharge on their sale, which goes back to the municipalities in which they’re sold for the use of litter reduction and environmental clean-up. According to the state’s Council on Environmental Quality’s 2023 Annual Report , as of March 31, 2023, municipalities have raised $6.6 million on this surcharge since Oct. 1, 2021, when it first went into effect. While this has provided a significant source of revenue for Connecticut’s municipalities, it has also highlighted the ubiquity of nips across the state and has left many towns and cities wondering how to best use those funds.

The bill also contained a provision for the creation of a stewardship program, in which environmental stakeholders and beverage distributors, including wine and liquor distributors, would hold meetings to discuss ways in which environmental goals could be met. Nelson said that the provision has since been shelved by the Environmental Committee, however, and according to DEEP’s website, their last meeting was held in December 2023.

“The Environmental Committee of the legislature said certain deadlines weren’t met, so we’re kind of killing that provision of the law for now,” said Nelson. “If redemption rates plateau short of 80%, maybe that’s something that gets revisited in the future.”

Ultimately, the wheels of legislature move slowly, and as Nelson and Collins noted, evaluating the impact of legislation takes years of analysis after a bill is passed. Nelson said it was unlikely that the state is “going to be blazing the path forward” to any further deposit increases, but that it will remain committed to assessing the bill’s impact on reaching the state’s redemption rate goals.

“I think it’s worth keeping in mind that if a goal of 80% redemption isn’t reached, there may be other measures needed,” said Nelson.

The post E-Can-Omics: The impact of raised deposits appeared first on Connecticut Inside Investigator .