“Bad rebounds” and the circular economy: are plastic waste from bottled water and separated plastic collection complements or substitutes?

The multidimensional nature of environmental issues is increasingly recognised, as different relevant behaviours may be mutually reinforcing or in trade-off. This is particularly relevant when resource use is tightly linked to packaging, as in the case of bottled water. Using Cross-sectional data on Italian households, this paper assesses whether plastic waste separation and bottled water consumption behave as complements or substitutes in consumers' behaviour. The paper provides evidence of a circular economy rebound effect: the availability of more convenient plastic-collection infrastructures -especially door-to-door systems- is associated with higher bottled water consumption and, consequently, with greater plastic waste generation. This finding has important policy implications: the rebound effect cannot be explained by differences in environmental concern or ‘green’ types, but is shaped by waste-management infrastructures, which operate through consumers' preferences and incentives for circular behaviours. Results are robust to potential endogeneity concerns and to alternative definitions of the rebound variables.