Prime Minister Kasim Majaliwa announced the government ban on plastic bags in the country from June 1, 2019. It is a ban on production and use of plastic bags mainly on environmental grounds. The kernel of the matter is that plastics are not easily biodegradable. There are many perspectives from which this ban can be discussed. This piece outlines some economic perspectives of the ban in Tanzanian context.
The ban is taken very positively from green economy perspective. Green economy concept is wide. It includes the situation where economic activities of production, transportation, storage, consumption and disposal of goods and services are environmental friendly. It is all about ensuring that economic activities are not having negative impacts to aquatic and terrestrial flora and fauna.
It is all about sustainable economic growth and development without affecting the environment negatively, taking into account its bearing capacity.
It takes into account intergenerational considerations in all economic undertakings. In this context it recognises the fact that the current generation did not inherit the Mother Earth from the forefathers but actually borrowed it from its children and children’s children. In short it is about sustainable development.
More for Green Economy
Banning plastic bags is one of several strategies of attaining green economy goals. There are many other strategies that should be implemented and where already in implementation then should be enhanced. Among the most important strategies include education and sensitisation on the importance of clean environment for green economy. Another strategy is the use of fiscal policy and fiscal policy instruments to attain green economy. This includes the use of green taxes and subsidies.
Green taxes and subsidies
Green taxes would impose tax for polluters. They include those producing, transporting, storing and disposing in unenvironmental friendly manner. This is a stick and cost and therefore a disincentive to engage in activities that pollute the environment.
Green subsidies are carrots and therefore incentives to engage in economic activities in environmental friendly manner. A subsidy would shoulder a cost that an economic agent such as a producer would bear in its absence.
Typically the government would subsidise environmental - and by extension – green economy friendly activities such as production of environmental friendly bags to replace the plastic ones. One expects some budgetary measures in the forms and names of green taxes and subsidies in some national budgets and correctly so.
Production economics perspectives of the ban can focus on time lapse between the announcement of the ban and its effective date. There are about two months between the ban and effective dates. Issues of discussion here include what is possible in the short, medium and long terms from production economics perspectives.
In this context, issues of discussions include readiness to replace plastic bags and meet market demands within the given time. It is a supply side of the economy issue. It is about available flexibility and room to manoeuvre to be able to produce alternative bags as per market demands without disruptions in the supply of the bags.
From entrepreneurship point of view, the ban is an opportunity for those able and willing to take it. It is an opportunity for many in the long bags value chain and associated nodes.
They include not only the entrepreneurs who can produce alternative bags but also those who will supply raw materials and other factor inputs needed for the bags. Other potential beneficiaries include designers and distributors of the bags.
Whereas the ban of plastic bags is an opportunity for some, it is also a challenge for others. These are the losers from this otherwise good decision. They include those who have been benefitting directly and indirectly from plastics bags businesses. They include mainly producers who had invested in production system, machineries and equipment. If the same cannot be converted and produce alternative bags or be used to produce other goods, it will be a big challenge.
It may have negative implications to invested funds as well as direct and indirect employment. One hopes however that there are possibilities of putting the same machines and using the same business infrastructure that has been used for plastic bags to produce alternative bags. This will be the case if the machines, systems and skills used for plastic bags are not cast in stone.