£5 vape deposit proposed as waste firms tackle fire risks and litter costs

Waste companies are backing a £5 deposit on vapes to tackle the growing environmental costs created when devices are discarded improperly. From an economic perspective, the proposal aims to internalise the negative externalities associated with vape waste, particularly the fire risks posed by lithium batteries in bin lorries and recycling centres. By attaching a financial incentive to returns, firms hope to correct a market failure where disposal costs are borne by waste operators and taxpayers rather than consumers. In effect, the deposit would apply the ‘polluter pays’ principle: a small upfront charge that nudges behaviour, boosts recycling rates and reduces the costly habit of treating vapes as throwaway products.

Put a £5 deposit on vapes to stop fires, say waste companies - BBC News

1. Explain the distinction between private and social costs of consuming vapes.

2. Using an MSB/MSC diagram, discuss the likely impact of imposing a £5 deposit on the net welfare loss arising from vape consumption.

3. Discuss whether alternative government interventions would be more effective than a £5 deposit scheme in reducing the negative externalities arising from vape consumption.