Some residents of Latvia still wonder what happens to the deposit fee on packaging that is not returned to the system, and whether the system operator profits from it. Although various assumptions circulate in society, the deposit system’s operations rest on a transparent and sustainable financial model. It is built on a non-profit principle, meaning that all funds available within the system go towards its day-to-day running and are reinvested in new solutions that make the system more convenient and efficient.

The deposit system’s operations are funded from three main revenue sources. First, the system is financed by membership fees paid by drinks producers and importers for every unit of deposit packaging placed on the market. Second, revenue comes from collected material handed over for recycling. Third, funding is supplemented by the deposit fee on packaging that residents have not returned to reverse vending machines. These sources of funding cover the deposit system’s day-to-day operation and development, meeting the costs of accepting empty packaging, logistics, sorting and preparation for recycling.

“People often assume that the deposit system profits from packaging that is not returned. In reality, the system operates on a non-profit basis, and all financial resources are used to fund its operation and development. If a financial surplus arises in a given year, it is not paid out as dividends: the funds go towards running the system and are invested in its development the following year, so that it becomes even more convenient, efficient and accessible for residents,” explains Diāna Imaka, Chief Financial Officer of SIA Depozīta Iepakojuma Operators.

The operator pays out a significant share of revenue (around 40%) to retailers as compensation for accepting packaging and maintaining deposit points on a day-to-day basis. Funds remaining within the system are also used for its development, including the rollout of new solutions such as the most powerful deposit packaging collection point in the Baltics: the “Dižtaromāts” in Mežciems. Investments are also being made in modernising sorting centre equipment, improving logistics processes and developing IT systems.

“Our task is not to generate profit, but to ensure that every piece of deposit packaging reaches recycling as efficiently as possible. At the same time, we are continuously improving the deposit system so that it becomes ever more convenient and accessible to residents, which is why we regularly invest in infrastructure and look for solutions that make returning packaging simpler,” Imaka stresses.

Latvia’s deposit system is built as an extended producer responsibility scheme. This means that drinks producers and importers themselves fund the system’s operation by paying a membership fee for every unit placed on the market. Depozīta Iepakojuma Operators, in turn, is responsible for the system’s day-to-day running, from packaging collection and logistics through to preparation for recycling. This model guarantees the system’s sustainable growth going forward, while supporting a cleaner environment and the recycling or return to circulation of packaging.