Deposit-refund system

A deposit-refund system (DRS), also known as deposit-return system, advance deposit fee or deposit-return scheme, is a surcharge on a product when purchased and a rebate when it is returned. A well-known example is when container deposit legislation mandates that a refund is given when reusable packaging is returned. A DRS is a market-based instrument to address externalities, similar to a pigovian tax, with the key difference that a DRS refunds the fee after the product is returned.^[1] This provides an incentive to consumers to properly dispose of a product.

A Schematic Representation of Deposit Return Scheme in Scandinavian Countries

A container deposit refund facility in Melbourne Australia

While most commonly used with beverage containers, DRS can be used on other materials including liquid and gaseous wastes.^[2] A DRS is used on products such as batteries, tyres, automotive oil, consumer electronics and shipping pallets.

There are three potential advantages of a DRS: it reduces illegal dumping by giving a financial incentive, it makes monitoring and enforcement easier, and evading the costs is difficult.^[1]

DRS is said to be based on the principles of Extended Producer Responsibility.^[3]

DRS can be either voluntary or mandated by legislation.

See also

• Container-deposit legislation
• Circular economy
• Environmental economics
• Oregon Bottle Bill
• Product stewardship
• Reverse vending machine
• Waste management

Further reading

• Butler, Graham (2025). "Deposit return schemes of EU Member States and the EU's internal market". Review of European, Comparative & International Environmental Law. 34. doi:10.1111/reel.12591.