Analysis of the plastic-bag levy in South Africa

In an attempt to control the environmental problems posed by plastic shopping bags, the South Africa government combined elements of regulation with a levy per bag, similar to that applied by the Irish. Charging for bags commenced in May 2003 with a fixed nominal price of 46 rand cents for 24-l bags across all retailers, which was subsequently lowered. The levy charged had only short run success. Over time, the effectiveness of the levy has continued declining despite its comprehensive application at checkout points.

► With the introduction of the levy, the use of plastic bags fell sharply across retailers, with the exception of the low-income retailer.
► When the price was set at a lower level, the quantity demanded rebounded.
► The general price increases that followed the initial price reduction induced proportionally different reactions from the consumers.
► In general, the consumers continued to steadily increase their consumption levels despite the different price increases.