The Taiwanese deposit refund program is similar to one introduced in Korea except that it has been more effective. Since 1988, Taiwan has been implementing a recovery/recycling scheme for several types of solid waste, including PET bottles, glass bottles, aluminium cans, waste paper, used tires, lubricant oils, mercury cell batteries and pesticide containers (O'Connor, 1998: 101). In 1998, a deposit-refund scheme to support the recycling effort was to be introduced in stages, beginning with PET bottles. In 1998, there were some 104 manufacturers of PET bottles in Taiwan making 260 million bottles a year (O'Connor, 1998). Each manufacturer is required to submit a recycling and disposal plan to the provincial or municipal authorities. A foundation was formed by members of the industry to administer a joint recycling fund to cover costs of collection and recycling of the bottles, with the fund replenished from a levy on the sale of each bottle (O'Connor, 1998: 101). In 1998, the deposit rate per PET bottle was NT$2.00 (around US$0.08). Around 25% of the deposit is refunded upon delivery to the recycling plant by one of the 23 salvaging companies that recover the bottles from some 14,000 collection locations. In the first two years (1989-1990) the Taiwanese EPA set a target-recycling rate of 50%, rising to 60% by 1992. By 1991, the recycling rate had only reached 41%, but by the fourth year (1992) it jumped to almost 80% comparing favourable with rates in OECD countries (O'Connor, 1998).
O'Connor (1998) suggests that the deposit rate in Taiwan was set at a level yielding strong incentives for recovery and recycling. "The wide distribution of collection points and the development of a sizeable salvaging industry have also contributed to the scheme's success. The focus initially on one product presumably made the system more manageable and made possible incremental learning that should facilitate the extension of the scheme to other products" (O'Connor, 1998, 101).
O'Connor, D., 1998, "Applying economic Instruments in Developing Countries: from theory to implementation", Environmental and Development Economics, 4, 91-112, Cambridge University