Early determinants of packaging waste recovery under Iceland's 2023 EPR reform: Evidence from Grey Relational and econometric analysis

This study examines the early effects of Iceland's 2023 extended producer responsibility (EPR) reform for packaging waste, one of the first nationwide implementations of a fully harmonised, producer-funded system in a small and geographically dispersed country. Using municipal-level data for 2023–2024, the analysis evaluates how socioeconomic, demographic, and infrastructural factors influence per capita collection of packaging paper and plastics. Grey Relational Analysis (GRA) is applied to identify the most influential determinants under limited data conditions, and pooled ordinary least squares (OLS) regression is used to estimate their statistical associations while controlling for region and year. Results: show that paper recovery increased markedly in 2024, reflecting rapid adaptation to standardised collection, whereas plastic recovery remained largely unchanged. In this early two-year sample, municipal variation appears to be shaped primarily by structural and service-design factors rather than socioeconomic characteristics. A higher ratio of seasonal housing is associated with greater apparent per capita recovery, and a higher share of home collection is linked to lower recovery for both materials. The negative relationship between per capita costs and plastic recovery suggests diminishing returns to expenditure or reflects structural remoteness constraints that raise costs without increasing capture.The findings highlight the importance of tailoring EPR implementation to the local context. Adjusting performance metrics for seasonal occupancy, optimising the curbside/drop-off collection mix, and refining fee distributions for structurally high-cost municipalities can improve equity and efficiency. Overall, EPR provides the financial and regulatory scaffold, but geography and system design ultimately determine realised recycling outcomes.