State Program on Recycling Called Sound : Ecology: A study of the unique 3-year-old operation finds that participation is up dramatically. The cost to consumers is lower than in other states.

Criticized at one time or another by recycling firms, retailers, consumers and environmentalists, California’s novel beverage container recycling system is fundamentally sound, according to the first broad study of its three years of operation.

Though the report concludes that the program’s funding mechanism should be restructured, it says that recycling is up dramatically and costs less to consumers than in traditional “bottle-bill” states. The study, a copy of which was obtained by The Times, will be presented to the Legislature today.

The state has made “rapid and significant” progress toward the legally required goal of recycling 80% of all cans and bottles, according to the report by the Ernst & Young accounting firm, commissioned by the state Department of Conservation. Californians are recycling 68% of all beverage containers, the study found.

That level has been reached with a system that avoids handling used containers in grocery stores, as occurs in most bottle-bill states. California’s approach has saved consumers an annual $245 million to $390 million--or $32 to $52 for a family of four--according to the Ernst & Young report.

“Four years ago, many people had their doubts that there could be a successful alternative to a traditional bottle-bill program,” said Edward G. Heidig, director of the Department of Conservation. “The California approach was an orphan. This study validates our success.”

Though the California system costs more to administer, it requires fewer steps in getting a container recycled, saving consumers money, Heidig said.

Bottle-bill laws, preferred by many environmentalists, have achieved high recycling rates in several states. They typically offer refunds of 5 cents or more per container as well as the convenience of recycling at supermarkets. However, retailers object to the special handling and space needed to accept returns.

Those problems are avoided in California’s system, which is unique in its use of a range of collection schemes, from state-certified centers to curbside pickup.

Residents of other states still recycle more than Californians--some states have achieved rates of 85% or more. Still, consumer recycling has increased in California by 72% since 1987, the study found.

Of those who began to recycle last year--when refunds for 12-ounce containers went from a penny to 2 1/2 cents--40% took their bottles and cans to supermarket-based recycling centers; 30% used curbside, drop-off or other collection programs, and another 30% used older, established private recycling centers.

Ernst & Young recommends an overhaul of the recycling fund that supports the current system. It could go broke as recycling rates improve, the study found.

Now, beverage distributors pay 2 cents per 12-ounce can or bottle into the fund; consumers get their 2 1/2-cents refund out of the fund. The difference has been made up by the fact that not all containers have been returned for refund.

The fund has had enough money that it has been able to make incentive payments to most of the new recycling centers. These centers would not otherwise be able to operate, given the current economics of recycling--particularly for glass and plastic containers.

These incentive payments were conceived as temporary, to help the new centers become established. The Ernst & Young report predicts that they are likely to be necessary for the long term if the state wants to maintain centers that are convenient to consumers. State law requires that a recycling center be located within half a mile of all supermarkets with annual sales of $2 million or more.

Meanwhile, as recycling rates climb and more containers are returned, there is less surplus in the fund. If recycling rates for each material are not met by 1993, current law allows refunds to be doubled. Ernst & Young estimates that the fund could then be losing $22 million a year.

In other recommendations, the study advises closing about 43 of the least economical supermarket-based centers and taking another look at so-called “reverse” vending machines, which it found to be far less efficient than staffed recycling centers. The machines, said the report, may be less successful because they accept only whole--not crushed or odd-sized--containers. Also, consumers do not consider them as speedy or reliable as a center with an attendant.

The study--based on 18 months of research, including a statewide survey of 1,000 consumers--also found that consumers prefer that recycling centers be open at least six hours on weekends. It recommends requiring clearer signs in grocery store windows and an end to lapses in service when a recycling center closes.

Recycling in California

Here are highlights of the Ernst & Young report on the first three years of California’s beverage container recycling program. The study was sponsored by the state Department of Conservation. Selected Findings

* Recycling in California has doubled since the program began in 1987; by material it has gone from 45% to 76% for aluminum; 10% to 51% for glass; 0% to 31% for plastic.

* Consumers like the new supermarket-based recycling centers: 20% rated them excellent; 58% good; 15% fair; 2.5% poor.

* The state’s recycling infrastructure has grown: Refund centers of all types have grown from 500 to more than 2,000; curbside programs have increased from 30 to more than 200.

Selected Recommendations

* Require supermarket-based centers to be open at least six hours each weekend.

* Allow recycling firms to collect and pay refunds at small businesses and homes. State law now prohibits this.

* Consider adding other beverage containers, such as those for wine and bottled water, to the program.

* Adjust operations at rural recycling centers.

* Eliminate some inefficient centers by raising the requirement to one center for every supermarket with $4 million, not $2 million, in annual sales.

* Eliminate the current imbalance between money paid into the state recycling fund by distributors and money taken out for refunds to make recycling economically possible. The spread now could allow as much as $22 million annually to be drained from the fund by 1993.

* Increase state efforts to develop recycling markets, particularly for glass and plastic.

* Develop models that include recycling facilities in residential and commercial development designs.