Last month, the government of Ontario introduced legislation to drastically change the way that the province manages its garbage and recycling. Until now, municipalities have been legally obligated to operate their own Blue Box recycling programs, and taxpayers have been picking up 50 per cent of the bill.

Not only did this system unfairly tax residents, it created no economic incentive for producers to make products and packaging that are easier and cheaper to recycle. On top of that, Ontario's recycling rate has been stuck at 25 per cent for the past 20 years, but the cost to recycle has gone up by 70 per cent in the past 10 alone. This costly system has meant that of the 12 million tonnes of waste Ontario generates each year, a whopping 57 per cent is recyclable, but is sent to landfills anyways.

So what just happened? Moving forward, in Ontario the companies that make or import products or packaging will be required to ensure their products don't end up in landfills. How they do that is up to them - meaning they have the freedom to innovate and benefit from making better choices than their competition. If one grocery store uses a biodegradable container for strawberries, and their main competitor doesn't, then the store with the biodegradable container will have lower recycling costs.

This is a game changer in getting businesses to lead the way on the changes we need. Instead of blindly paying into a system that has failed to raise recycling rates, businesses will be given targets, which will become increasingly ambitious over time, and be held accountable for meeting them. Companies will be able to do this independently or to band together with others, but ultimately each producer of products and packaging will need to take the full life cycle of their products into account as they make business decisions.

Forward thinking businesses such as Loblaws and Unilever have been advocates of this new legislation because innovating for the environment can now be a competitive advantage, helping them reduce their costs and boost their sales. Similar to pricing carbon, this kind of market-based incentive generates a virtuous cycle that will allow Ontario to tackle pollution while simultaneously generating prosperity and stimulating the economy.

So what does this mean for average Ontarians? Well in the short-term, not that much. The Blue Box programs will still be around, and packaging isn't likely to change overnight. But right away municipalities will be unburdened from the cost of recycling, and will be able to reinvest the savings into services and programs.

In the long run what this will mean is that the prices for recycling products will no longer be subsidized by taxpayers, they will be included in the cost of the product purchased, creating a market incentive to find more environmentally friendly products. The spillover effect of this is that we will start lowering the per cent of waste sent to landfill, and doing that actually generates jobs and GDP. The Conference Board of Canada estimates that if Ontario reaches its 60 per cent diversion rate (not an unreasonable goal when compared to other places in the world), we could generate 13,000 new jobs and $1.5 billion in GDP.

It's been a long time coming - and the devil will be in the details - but the government of Ontario and Minister of the Environment and Climate Change Glen Murray deserve a round of applause for taking this important step. They've put forward a plan that has the support of environmental groups, economists, businesses and municipalities, and that will save money, create jobs and reduce waste. And that's good news for all of us.