A peer-reviewed study published in the journal Resources, Conservation and Recycling has found that plastic credit revenue enables collection project operators in low- and middle-income countries (LMICs) to achieve unit collection costs that are, on average, 40 percent lower than comparable operations funded solely by material sales and tipping fees, with the cost reduction directly attributable to the scale and infrastructure investment that credit revenue makes economically feasible. The study, conducted by researchers at Delft University of Technology and the Indian Institute of Management Ahmedabad, analysed financial data from 47 certified plastic collection projects across India, Indonesia, the Philippines, Ghana, and Kenya.
Methodology and key findings
The research team conducted structured interviews with project operators and obtained financial data covering collection volumes, operating costs, material sales revenues, and credit income for the 2022 to 2024 period. A matched-pair comparison was constructed using 23 non-credit-funded collection operations in the same geographies with similar material compositions, enabling a like-for-like cost comparison. The 40 percent average cost reduction reflects three primary mechanisms: first, credit revenue enables operators to invest in certified weighbridges, digital collection logging systems, and GPS-tracked vehicles that reduce weight estimation variance and post-collection material loss, lowering the effective cost per verified tonne. Second, the income guarantee that credit programmes extend to waste picker networks reduces collector turnover, lowering the recruitment and training costs that non-credit operations spend repeatedly on an unstable workforce. Third, credit revenue provides working capital that enables operators to accept longer payment terms from downstream recyclers, reducing the discount applied to material sold under urgent cash-flow pressure. The study found that the cost reduction benefit was largest for ocean-bound plastic projects in the Philippines and Indonesia, where the combination of high additionality and premium credit prices provides the most substantial supplementary income relative to material sales.
Policy implications
The authors argue that the cost reduction evidence supports the inclusion of plastic credits as a supplementary compliance instrument within EPR frameworks in LMICs, on the grounds that credits do not merely fund additional collection but structurally improve the economics of collection operations in ways that persist beyond any individual credit vintage.