Myths vs. realities: Deposit return schemes & packaging reuse — what the evidence actually supports

Only 10 US states plus Guam operate container deposit programs, yet those jurisdictions collectively recover 60% of eligible beverage containers compared to a 24% recycling rate in non-deposit states, according to the Container Recycling Institute's 2025 analysis. Despite this performance gap representing billions of containers and hundreds of millions of dollars in material value, deposit return schemes (DRS) remain among the most politically contested waste management policies in the United States. The debate is saturated with claims from both advocates and opponents that often diverge sharply from what the evidence actually supports.

Why It Matters

The US generates approximately 35 million tons of plastic waste annually, of which only 5 to 6% is recycled, according to the Department of Energy's 2025 National Recycling Strategy update. Beverage containers, including PET bottles, aluminum cans, and glass bottles, represent approximately 40% of litter by volume and a significant fraction of recyclable material lost to landfills. The economic stakes are substantial: the Closed Loop Partners estimated in 2024 that the US loses $4.5 billion annually in recoverable material value from beverage containers alone.

Regulatory momentum is accelerating. Between 2023 and 2025, seven additional states introduced deposit return legislation, with Colorado, Illinois, and Washington advancing bills to committee votes. The EU's revised Packaging and Packaging Waste Regulation (PPWR), finalized in 2024, mandates that all member states implement DRS for single-use plastic bottles and aluminum cans by 2029, creating competitive pressure on US exporters and multinational consumer goods companies operating in both markets.

For investors in consumer packaged goods, waste management infrastructure, and circular economy ventures, the ability to distinguish evidence-based claims from industry lobbying and activist hyperbole is directly material to capital allocation. The myths surrounding DRS frequently influence policy outcomes that can shift billions in infrastructure investment and reshape competitive dynamics across the beverage supply chain.

Key Concepts

Deposit Return Schemes (DRS) require consumers to pay a small refundable deposit, typically 5 to 15 cents, when purchasing beverages in eligible containers. Consumers recover the deposit by returning empty containers to designated collection points, typically reverse vending machines (RVMs), retail locations, or redemption centers. The system creates a financial incentive for container return and generates a clean, separated material stream with significantly higher recycling quality than curbside collection.

Extended Producer Responsibility (EPR) shifts financial and operational responsibility for packaging end-of-life from municipalities to producers. DRS is often implemented alongside or as a component of broader EPR frameworks. Understanding the interaction between DRS and EPR is essential because poorly designed integration can create cost duplications and collection system conflicts.

Packaging Reuse Systems involve refillable containers returned, cleaned, sanitized, and refilled rather than recycled. Reuse systems represent a fundamentally different circular model than recycling, requiring reverse logistics infrastructure, standardized container designs, and industrial washing facilities. The distinction between recycling-oriented DRS and reuse-oriented refill systems is frequently blurred in policy debates.

Reverse Vending Machines (RVMs) are automated collection devices that accept empty containers, verify eligibility through barcode scanning or material detection, and dispense deposit refunds. TOMRA, the global market leader, operates approximately 80,000 RVMs worldwide and processes over 45 billion containers annually.

Myths vs. Reality

Myth 1: Deposit return schemes are too expensive and make beverages unaffordable for consumers

Reality: The net cost impact on consumers is near zero because deposits are refundable. Operational costs of DRS, including collection infrastructure, logistics, and administration, add 1 to 3 cents per container to the beverage system cost, according to a 2024 analysis by Eunomia Research & Consulting. In Michigan, which has the highest US deposit rate at 10 cents, beverage sales volumes show no statistically significant decline compared to neighboring non-deposit states after adjusting for population and income differences. The 2024 Oregon DRS modernization, which increased its deposit from 5 to 10 cents, saw return rates jump from 64% to 86% with no measurable impact on beverage sales. System costs are typically absorbed through unredeemed deposits, material sales revenue, and producer fees, not consumer price increases.

Myth 2: Curbside recycling programs can achieve the same results without deposit schemes

Reality: No curbside program in the US or globally has achieved beverage container recovery rates comparable to well-designed DRS. The highest-performing US curbside programs, typically in communities with strong environmental culture and convenient single-stream collection, achieve 35 to 45% beverage container recovery rates. The lowest-performing US deposit states still exceed 50% recovery. The gap is structural, not operational: DRS provides a direct financial incentive at the individual level, creates a clean single-material stream without contamination from food waste and other recyclables, and captures containers consumed away from home, which account for 30 to 40% of beverage consumption and are almost entirely missed by curbside programs.

Myth 3: Deposit schemes put curbside recycling programs out of business

Reality: This claim, frequently advanced by municipal waste haulers, confuses revenue impact with program viability. When deposit containers are removed from curbside bins, municipalities lose the revenue from those high-value materials (primarily aluminum and PET). However, curbside programs continue operating for all other recyclable materials. A 2025 study by the Northeast Waste Management Officials' Association found that DRS states' curbside programs had slightly lower per-ton processing costs because the removal of containers reduced sorting complexity and contamination. In Oregon and Michigan, curbside recycling programs operate alongside DRS with comparable or better financial performance than programs in non-deposit states when adjusted for the full system cost including litter cleanup savings.

Myth 4: Modern packaging reuse systems are commercially proven and ready to replace single-use at scale

Reality: Despite significant investment and media attention, packaging reuse systems for beverages remain economically challenged outside of specific contexts. Loop, Terracycle's reuse platform launched with major brands including Nestle, PepsiCo, and Unilever, scaled back operations significantly in 2023 after failing to achieve the return rates and consumer adoption needed for economic viability. The fundamental challenge is logistics cost: collecting, transporting, washing, and redistributing reusable containers costs 2 to 4 times more per serving than single-use packaging for most product categories, according to a 2024 lifecycle cost analysis by McKinsey. Reuse works economically in closed-loop systems with high-frequency returns, such as restaurant and food service operations, beer kegs, and office water delivery, but open-loop consumer-facing reuse remains pre-commercial for most beverage categories.

Myth 5: Deposit return schemes primarily benefit large beverage companies at the expense of small producers

Reality: DRS costs are proportional to container volumes, meaning large producers pay more in absolute terms. Small craft brewers and independent beverage producers often benefit disproportionately because DRS infrastructure provides access to collection and recycling systems they could not individually afford. The Oregon Beverage Recycling Cooperative, which operates that state's DRS, serves over 1,200 registered distributors of all sizes on equal terms. However, the administrative burden of DRS compliance, including container registration, barcode requirements, and reporting obligations, does impose fixed costs that are proportionally heavier for small producers. Well-designed systems address this through simplified registration processes and tiered fee structures based on volume.

Myth 6: All deposit return schemes perform equally well

Reality: Performance varies enormously based on design parameters. The deposit amount is the single most important variable: systems with deposits of 10 cents or higher consistently achieve return rates above 80%, while 5-cent deposits typically achieve 60 to 70%. Norway's Infinitum system achieves 97% return rates with deposits equivalent to 15 to 30 US cents. Collection convenience is the second critical factor: systems with dense return point networks (including RVMs in supermarkets, bag-drop facilities, and mobile collection) outperform those relying on limited redemption centers. Material scope also matters: systems covering only PET and aluminum miss the glass and carton containers that represent 15 to 25% of the beverage container mix.

What's Working

The modernization of legacy US deposit programs demonstrates clear performance improvements. Oregon's 2024 system upgrade, managed by the Oregon Beverage Recycling Cooperative, introduced bag-drop collection points where consumers can return containers in bags rather than feeding them individually into RVMs, reducing return time by 70%. Return rates increased from 64% to 86% within 12 months of the deposit increase and infrastructure expansion.

TOMRA's deployment of AI-powered reverse vending machines has reduced contamination in collected streams to below 0.5%, producing recycling feedstock that commands premium pricing. Their R1 series machines process 100 containers per minute, accept crushed and partially damaged containers, and integrate directly with retailer loyalty programs, turning the return experience from an inconvenience into a positive customer interaction. In 2025, TOMRA reported that retailers hosting their latest-generation RVMs saw a 12% increase in associated foot traffic.

Closed Loop Partners' investment in US deposit modernization infrastructure, including $75 million committed through their circular economy fund, has catalyzed private sector engagement in states considering new DRS legislation.

What's Not Working

Political opposition from segments of the retail and waste management industries continues to block DRS expansion in most US states. The American Beverage Association spent $26 million on lobbying against state deposit bills between 2022 and 2025, according to OpenSecrets data, despite several member companies publicly supporting circular economy goals. This disconnect between corporate sustainability commitments and trade association lobbying creates credibility risks for beverage companies.

Existing US deposit systems suffer from infrastructure underinvestment. California's CRV program, the largest US deposit system by volume, has seen redemption center closures reduce convenient return points by 40% since 2016, contributing to declining return rates that dropped from 85% in 2013 to 61% in 2024. The system requires significant capital investment to reverse this decline.

Interoperability between deposit systems remains absent. Each US deposit state operates an independent system with different deposit amounts, eligible container types, and administrative structures. A consumer purchasing a beverage in Connecticut cannot redeem the container in neighboring Massachusetts without encountering different rules. This fragmentation increases system costs and reduces the efficiency gains that a unified national approach could deliver.

Key Players

Established Leaders

TOMRA Systems is the global leader in reverse vending and sensor-based sorting, operating in over 60 markets with 80,000+ RVMs deployed. Their technology processes 45 billion containers annually and commands approximately 75% global market share in automated collection equipment.

The Oregon Beverage Recycling Cooperative (OBRC) operates the most efficient and innovative deposit system in the US, achieving 86% return rates while serving as a model for states considering DRS implementation.

Closed Loop Partners is a New York-based investment firm focused on circular economy infrastructure, with significant investments in collection, sorting, and recycling technology supporting DRS modernization.

Emerging Startups

Reloop Platform provides policy advocacy and technical consulting for deposit system design, serving as a knowledge hub connecting policymakers with operational best practices from global DRS implementations.

Canopii develops digital deposit management software enabling container tracking, deposit reconciliation, and fraud prevention for DRS operators, reducing administrative costs by 20 to 30%.

Returnity designs reusable shipping and packaging systems for e-commerce and food delivery, targeting the logistics cost barriers that have limited consumer-facing reuse models.

Key Investors and Funders

Closed Loop Partners has committed over $75 million to circular economy infrastructure investments including collection, sorting, and recycling facilities supporting deposit systems.

Circulate Capital invests in waste management and recycling infrastructure with a focus on reducing ocean plastic pollution, supporting collection systems in markets transitioning to deposit schemes.

The Walmart Foundation has provided grants supporting beverage container recovery infrastructure in underserved communities, complementing Walmart's own packaging sustainability commitments.

Action Checklist

• Assess organizational exposure to current and pending DRS legislation across operational states and supply chain jurisdictions
• Model the financial impact of DRS implementation on packaging costs, incorporating deposit float revenue and material value recovery
• Evaluate container design and barcode systems for compatibility with automated reverse vending collection
• Review trade association positions on DRS to ensure alignment with corporate sustainability commitments and identify credibility risks
• Investigate partnerships with RVM operators and redemption networks for branded return experiences that drive customer engagement
• Assess packaging reuse pilot opportunities in closed-loop contexts (food service, events, office settings) where economics are most favorable
• Engage with state-level policy processes to advocate for well-designed DRS that includes adequate deposit amounts and convenient return infrastructure
• Benchmark packaging recovery rates against DRS state averages to identify performance gaps in current recycling programs

FAQ

Q: What deposit amount is most effective for maximizing container return rates? A: Evidence from US and global programs shows a clear threshold effect. Deposits below 8 cents achieve return rates of 55 to 70%. Deposits of 10 cents achieve 75 to 90%. Deposits of 15 cents or higher achieve 85 to 97%. The relationship is not linear; the step from 5 to 10 cents produces a larger behavioral response than the step from 10 to 15 cents. For new US programs, a 10-cent minimum deposit is the evidence-based recommendation, with automatic inflation adjustment mechanisms to maintain incentive value over time.

Q: How long does it take for a new deposit return scheme to reach full operational performance? A: Based on recent implementations in Australia, Scotland, and Ireland, new DRS programs typically achieve 50 to 60% return rates within the first year, 70 to 80% by year two, and approach steady-state performance of 80 to 90% by year three. The ramp-up period reflects consumer habit formation, collection infrastructure buildout, and retailer operational learning. Programs that launch with extensive consumer education campaigns and high-density collection point networks achieve steady-state performance faster.

Q: Do deposit schemes reduce litter, or do they just capture containers that would have been recycled anyway? A: Litter reduction is one of the best-documented benefits of DRS. A 2024 meta-analysis of litter audit data from 12 jurisdictions found that DRS introduction reduced beverage container litter by 65 to 85% within two years of implementation. The financial incentive motivates collection of containers discarded in public spaces by both the original consumer and by informal collectors. Oregon's DRS eliminates an estimated 6.5 billion containers from potential litter annually. Importantly, DRS captures containers consumed away from home, in parks, stadiums, transit, and workplaces, that would otherwise enter waste streams with near-zero recycling probability.

Q: What are the main technology trends shaping the future of deposit return schemes? A: Three technology trends are transforming DRS operations. First, digital deposits using QR codes or NFC tags embedded in packaging eliminate the need for physical barcodes and enable real-time tracking of individual containers through the return cycle. Second, AI-powered RVMs can identify and sort containers by material type, brand, and condition without barcode scanning, reducing rejection rates and improving throughput. Third, mobile app integration allows consumers to locate return points, track deposit balances, and receive refunds digitally, removing friction from the return process. TOMRA's latest machines incorporate all three capabilities and are being piloted in Norway and Germany.

Sources

• Container Recycling Institute. (2025). Bottle Bill Resource Guide: US Container Deposit Programs Performance Data. Culver City, CA: CRI.
• US Department of Energy. (2025). National Recycling Strategy: 2025 Progress Update. Washington, DC: DOE.
• Eunomia Research & Consulting. (2024). The Cost of Deposit Return Systems: Global Evidence Review. Bristol, UK: Eunomia.
• Closed Loop Partners. (2024). Accelerating Circular Supply Chains: US Beverage Container Recovery Analysis. New York: Closed Loop Partners.
• TOMRA Systems. (2025). Annual Report 2024: Leading the Resource Revolution. Asker, Norway: TOMRA.
• McKinsey & Company. (2024). The Economics of Packaging Reuse: When Do Refill Systems Make Financial Sense? New York: McKinsey.
• Northeast Waste Management Officials' Association. (2025). Deposit Systems and Curbside Recycling: Complementary or Competing Infrastructure? Boston, MA: NEWMOA.