Assessing the Impact of the Disposable Bag Tax in Montgomery County, Maryland: Do the Effects of the Disposable Bag Tax in Montgomery County, Maryland Still Persist Seven Years Later?

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Bryn Mawr College. Department of Economics
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In the United States, over 100 billion disposable single-use carryout bags are consumed each year (Wagner, 2017). Both the production and consumption of disposable bags greatly harm the environment. Plastic bags are produced with petroleum and natural gas, which are both non- renewable energy resources that harm the environment when they are used (Warner, 2010). Additionally, plastics are one of the largest sources of litter in the United States due to the fact that only a small percentage of plastics are recycled (Wagner, 2017). In 2015, plastics generated 34.5 million tons of municipal solid waste in the United States and only 3.14 million tons—about 10%- -were recycled (United States Environmental Protection Agency, 2018a). In addition, 4.13 million tons of plastic bags, sacks, and wraps were produced in the United States and only .53 million tons of these were recycled (United States Environmental Protection Agency, 2018a). The rest of the plastic bags that are not recycled end up in landfills, the ocean, or as litter. One of the problems associated with plastic bags floating throughout the environment is that they are not biodegradable (Warner, 2010). When plastic bags are exposed to sunlight they breakdown into smaller pieces, creating choking hazards for animals and leaving harmful substances in the environment (Warner, 2010). When plastic bags reach water sources, they can travel into sewage systems and clog the equipment (Wagner, 2017). Plastic bags can also clog recycling and sorting machines (Wagner, 2017). In addition, many people tend to think that paper bags are more environmentally friendly than plastic bags because they can easily be recycled; however, this is not the case. According to the United States Environmental Protection Agency, the production of paper creates 21% of toxic release inventory chemicals that are in the environment and causes a large amount of air pollution (United States Environmental Protection Agency, 2018b). Due to growing concerns about the environmental harm caused by the use and production of disposable bags, many municipalities throughout the United States have adopted different types of disposable bag legislation over the past decade. Currently, seventeen states and the District of Columbia have adopted disposable bag legislation(Romer, 2018). Disposable bag legislation is typically in the form of a tax, ranging from $0.05 to $0.20, but can also be in the form of a ban on disposable bags of a certain thickness. Although many countries and states have imposed legislation on disposable bags, not many studies have been conducted on the effectiveness of these laws in reducing disposable bag consumption. However, in 2013, Homonoff (2018) investigated the effectiveness of the $0.05 disposable bag tax in Montgomery County, Maryland. Homonoff's research finds that the disposable bag tax is effective in incentivizing consumers to change their behavior. She finds that the tax causes consumers to use fewer disposable bags and more reusable bags (Homonoff, 2018). However, Homonoff does not examine if the effect of the disposable bag tax persists. Using Homonoff's dataset that is available online, I am able to successfully replicate Homonoff's original findings. This study is an extension of Homonoff's paper that is originally from 2013 (Homonoff, 2018). The purpose of this study is to investigate whether or not the effects of the disposable bag tax in Montgomery County, Maryland persist seven years after it was implemented. This study improves on Homonoff's study by using more recent data on the disposable bag tax that is from 2019 and adds additional variables that may be important in determining the effect of the tax. I find that the effects of the disposable bag tax persist and still properly incentivizes consumers to use more reusable bags and fewer disposable bags. This is an important topic to examine because it is crucial to investigate if the tax is properly incentivizing consumers to change their behavior by encouraging them to use fewer disposable bags and more reusable bags. If consumers are using fewer disposable bags and more reusable bags then the policy should stay in place; however, if consumers are not changing their behavior the legislation should be changed by increasing the tax. My paper is organized in eight different sections. The first section provides a literature review on previous studies that have been conducted involving the effect of disposable bag taxes. The second section provides background information on the disposable bag tax in Montgomery County, Maryland. The third section provides a summary of Homonoff's paper from 2013. The fourth section provides information on the model that I use in my study. The fifth section provides summary statistics for my dataset. The sixth section provides the results for my study. The final two sections provide a discussion of my results, possible policy implications, and a conclusion of my study.