The recycling business in America is in a heap of trouble. The environmental and economic ripple effects on towns and cities are ominous.

China used to take our recyclables but essentially shut its doors in 2018 because the paper and plastics we shipped were too contaminated with garbage. Unsurprisingly, the United States leads the world in per capita municipal solid waste production, and the volume of single-use plastics, rising for decades, has soared since the start of the pandemic.

The closing of the Chinese market has caused America’s recycling business to tank — too much supply, too little demand. In Onondaga County, New York, for example, where collecting, processing and marketing recyclables had long paid for itself, even occasionally earning money, county residents forked over about $2 million in 2020 to cover recycling costs. Dozens of recycling programs have shuttered across the country and Americans are piling more trash than ever into incinerators and landfills, the equivalent of throwing up our collective hands, a trend that disproportionately impacts marginalized neighborhoods and communities of color.

But there’s a way to clean up this mess.

A couple of New York State legislators, Democrats from Long Island, Senator Todd Kaminsky and Assemblyman Steve Englebright, have drafted a recycling bill that, if enacted, would set a conspicuous precedent for other states.

The bill is designed to get money flowing back into New York’s recycling programs, with the prospect of upgrading trash-sorting technology and creating green jobs. It also provides incentives for consumer brand owners to use more recyclable materials and reduce their packaging overall.

For anybody concerned about keeping our communities from opening more sites to burn or bury rubbish and hemorrhaging cash to contend with, say, nonrecyclable plastic food containers, milk jugs and yogurt cups — cash that could go toward building new libraries or hospitals or parks — the legislation is a potential game changer.

And it wouldn’t cost New York taxpayers a dime. The opposite: it would return millions of tax dollars now paying for recycling to municipal coffers.

Instead, the law would get product manufacturers, all but the smallest, to pick up the recycling tab. The prospective legislation, in the works for more than a year, has not only what officials and others I spoke with say are reasonable odds of passing in Albany — it has a good chance of earning support from some of those same companies and their lobbyists.

Why? For certain businesses, it’s the right thing to do and on brand. Nespresso, the upscale coffee maker, recently reached out to Sims Recycling, whose facilities process most of New York City’s recyclables, volunteering to pay for the equipment Sims would need to extract aluminum from its coffee pods, and arranging with the New York City Department of Sanitation for the pods to be included in curbside pickup.

For others in the packaging industry, including some who have opposed such legislation before but now see states like California, Indiana, Massachusetts, Maine and Oregon considering similar bills, getting behind the idea — and therefore a seat at the table to help work out the details — is better than being left out of the process and holding the bag. The lobby group Ameripen, for instance, has lately suggested it is open to the idea.

We’re talking about more than some obscure state recycling bill, in other words. We’re talking about the glimmer of a cultural reset, a shift in how Americans view corporate and individual responsibility.

The New York bill would implement a concept called extended producer responsibility, an incredibly infelicitous recycling term. In essence, E.P.R. compels manufacturers, not consumers, to pay for the end-waste their products produce.

Depending on the environmental impacts of their packaging materials, E.P.R. requires manufacturers to pony up different amounts that municipalities can then use to offset recycling expenses. Right now, companies pretty much do what they wish when it comes to packaging, slapping, say, a metalized plastic label on a recyclable cosmetics bottle and making it nonrecyclable, or swapping plastic foam for pulped-paper egg cartons — with taxpayers having to absorb higher disposal costs.

“We’re reactive,” as Bridget Anderson, deputy commissioner for recycling and sustainability at the New York City Department of Sanitation, put it to me. E.P.R., she said, places the onus on manufacturers rather than consumers and municipalities, rewarding companies that go greener by lowering the fees they would otherwise be required to pay to dispose of their packaging.

If you’re thinking that companies just pass along those fees to consumers, and exploit the opportunity to reap profits, the law can be written to prevent price gouging, Senator Kaminsky says. And extended producer responsibility laws have been in operation for years in parts of Europe and Canada, where one study shows that the average consumer price increase due to an E.P.R. program is $0.0056 per item purchased. Depending on how they’re structured, these laws aren’t without critics — environmentalists concerned they don’t go far enough; a supermarket chain based in Maine worried about added costs to its branded products — but they don’t have a noticeable impact on consumer prices, the senator explained, because recycling costs are spread widely across industries.

The strategy isn’t new to New York. The state has passed E.P.R. laws targeting electronics, leftover paint, thermometers and batteries; and a New York City law covers refrigerators and air-conditioners. But all those items account for not much more than one percent of the city’s residential waste stream.

Anderson estimates that the prospective New York State bill, focusing on paper, plastics, metal and glass — anything to do with packaging — would account for “closer to half of all our waste.” It’s tricky translating that into dollars, but the cost of recycling in New York City approaches $150 million a year, she told me. The proposed extended producer responsibility would pay for “a large portion of that bill,” she said.

“An E.P.R. law for paper and packaging would be totally transformative,” insists Eric A. Goldstein. A senior lawyer for the Natural Resources Defense Council, he led a campaign to remove lead from gasoline years ago.

Surveys show Americans are eager to recycle but frustrated. They’re not sure what is recyclable (“wish-cycling” is the environmentalists’ term of art), and compliance often depends on sticks not carrots: fines for using the wrong bin, fees for not using reusable bags and forfeited deposits for unreturned bottles. Sticks work but can foster resentments about the nanny state and discourage participation when consumers fear the system isn’t reliable and responsibilities aren’t fairly shared.

A benefit of E.P.R. is that it isn’t punitive. And at the same time it encourages a robust public conversation around the larger carbon footprints of packaging materials because producers’ payments will be based on their environmental impacts.

More than that, money raised from one of these programs can underwrite capital investments in upgrading trash-handling technology, so that recycling facilities can recover more materials from the waste stream — materials that then flow back into the local economy. Tom Outerbridge, general manager at Sims, gave an example: “Municipal programs across the state and the U.S. now struggle with glass recycling because of its low value and high processing cost,” he said. “We could upgrade this glass to go back into new bottles, or into high-tech, low-carbon concrete to build greener buildings. But to do this requires investments that no one is currently willing to make.”

The proposed legislation would be “a win-win for consumers and the environment,” is how Andrew Radin, director of recycling and waste reduction in Onondaga County, summed it up.

The question now is whether Gov. Andrew M. Cuomo will get on board. He has laid out a climate agenda around renewable energy. Last week he trumpeted a program at the New York State College of Ceramics at Alfred University focused on improving the quality and marketability of recovered glass. But he didn’t mention E.P.R. in his latest budget.

The bill is expected to move forward this spring. New York can set an example for the nation. Environmentalists have their fingers crossed.