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Single-Use Plastics Ban: What does it mean for the economy?


Sohan Pujar

By

March 31st, 2021


It is indisputably established that a single-use plastics ban is environmentally advantageous. But what does it mean for the wider economy? Join Sohan in his exploration and predication of the economic consequences.


In February 2021, the Victorian government announced a ban on single-use plastics coming into effect in February 2023. Victoria will become the third Australian jurisdiction to phase out single-use plastics after South Australia and Queensland.[1] These items include but are not limited to plastic straws, cutlery, and plates. However, there are still exceptions such as plastic equipment used within the medical sector and plastic straws for the elderly residing in aged care centres. Other items such as cotton buds, polystyrene food, and drink containers are also being phased out.[2]

Why did the ban occur?

The ban was due to numerous factors which can be summarised as environmental, political and economic influences. With researchers estimating more plastic in the ocean than fish by 2025,[3] the environment is in a precarious state. Australia has had a long history of exporting plastics to Asia-Pacific countries for low costs, allowing Australians to enjoy the comforts of single-use plastics without suffering the economic and environmental consequences.[4] Now, countries that were once accepting Australian plastic waste, have closed their doors leaving the Australian government with a lot to reflect upon.[4] Hence, consecutive bans in Australian jurisdictions have been encouraged.

How will the economy react?

During the announcement of the ban, the government made no mention of any form of financial assistance in making the switch to alternatives, causing local businesses and SMEs deep concern. Many believe that this ban will mean increased costs in sourcing and producing alternatives. However, the government did explain it will provide some form of assistance and hopes that the two-year grace period will be sufficient time for the affected industries to make the transition.[2]

Additionally, the ban has sparked apprehension within the plastic manufacturing industry with fears of unemployment.

Is there any form of economic benefit gained from the ban?

Logically, the state-wide ban will influence a saturated form of demand for new alternatives. This growing demand will require the plastic alternative suppliers to scale their production capacity to meet it. Once scaled, businesses will enjoy the benefits from economies of scale.[5]

Rather than victimising the plastics suppliers, this ban offers an opportunity for the industry to reskill its staff and reconfigure its factories to adopt and supply an alternative to plastic-based products.[6] However, the transition will not be easy. It will have numerous challenges and will incur various additional up-front costs for the current plastic manufacturing industry.

Are there any case studies?

The National Centre for Policy Analysis (NCPA) led a study on July 2011 in analysing the economic effect of plastic bag bans. They placed a thin-film plastic bag ban on approximately eighty large stores located within Los Angeles County. After surveying the stores, NCPA concluded that there was a sales decline of 6% within the ‘ban area’, whereas there was a sales increase of 9% exterior to the ‘ban area’. Furthermore, there was a 10% reduction in employment within the ‘ban area’ compared to a slight increase in employment outside the ‘ban area’.[7]

What does this mean?

The findings of the NCPA are concerning for many retailers located within Victoria, however, the NCPA study of the Los Angeles County cannot completely predict the economic reactions in Victoria due to multiple differences in the variables.

The NCPA study only banned plastic bags in eighty large stores. This was likely to prompt people to shop at alternative stores within Los Angeles County. The NCPA also released claims of survey participants that the ban on plastic bags meant fewer goods were bought. This was due to people carrying only what they need. Many discretionary goods were left in the aisles.[7] These factors explain the reduction of sales by 6% and concurrently the increase of sales outside the ‘ban area’ by 9%.

However, the 10% unemployment figure is disheartening. With the initial costs to make the transition to alternatives proving expensive, businesses were forced to let go of employees to save on expenditure in the short-term before benefits of economies of scale take place.  The Victorian government is optimistic and hopes that by providing a two-year grace period, plastic alternative companies can establish themselves and commence manufacturing plastic-alternate products. The government anticipates its plan will reduce the initial short-term costs for businesses to transition, hopefully resulting in employee retention.

So, what will the ban mean for Victoria?

The switch to plastic alternatives is a recent progression to a greener economy. The impacts of these decisions cannot be measured as of now. Victorians must patiently await 2023 when the ban is enforced.[2] They must then wait additional years to experience the tangible benefits or challenges resulting from the policy decision.


[1] The Guardian. 2021. Victoria bans single-use plastics by 2023 to slash amount going to landfill. [online] Available at: <https://www.theguardian.com/australia-news/2021/feb/27/victoria-bans-single-use-plastics-by-2023-to-slash-amount-going-to-landfill> [Accessed 24 March 2021].

[2] Smethurst, A., 2021. Victoria to ban single-use plastics within two years. [online] The Age. Available at: <https://www.theage.com.au/national/victoria/victoria-to-ban-single-use-plastics-within-two-years-20210227-p576cs.html> [Accessed 24 March 2021].

[3] World Economic Forum. The New Plastics Economy. 2016. [online] Available at: <http://www3.weforum.org/docs/WEF_The_New_Plastics_Economy.pdf> [Accessed 27 March 2021].

[4] Morgan Stanley Australia. 2020. The Circular Economy of Plastics. [online] Available at: <https://www.morganstanley.com.au/ideas/the-circular-economy-of-plastics> [Accessed 24 March 2021].

[5] Corporate Finance Institute. Economies of Scale – Definition, Types, Effects of Economies of Scale. [online] Available at: <https://corporatefinanceinstitute.com/resources/knowledge/economics/economies-of-scale/> [Accessed 24 March 2021].

[6] Craftech Industries. Can Plastic Manufacturing Be Environmentally Friendly? – Craftech Industries – High-Performance Plastics – (518) 828-5001. [online] Available at: <https://www.craftechind.com/can-plastic-manufacturing-be-environmentally-friendly/> [Accessed 24 March 2021].

[7] Ncpathinktank.org. 2013. The Economic Effect of Plastic Bag Bans. [online] Available at: <http://www.ncpathinktank.org/media/the-economic-effect-of-plastic-bag-bans> [Accessed 24 March 2021].

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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