This study compares the social costs and environmental benefits of collecting single use drink containers through the Danish deposit system with the social costs and benefits of treating the containers as part of the municipal waste-disposal system. It focuses on single use polyethylene terphthalate and glass bottles, and steel and aluminium cans. The social costs of handling these containers in the deposit system includes the costs of collection, sorting, and transportation, adjusted against the profit from selling the collected material for recycling. The social cost of incinerating these containers as municipal waste consists of the expenses for the collection, incineration of the containers and disposal of ashes. If there is any income from energy generation accompanying incineration, this is adjusted against costs. The main environmental effects related to both strategies are quantified, valuated and included in the assessment. The results of the analysis show that there are significant social costs compared to the benefits connected with the new deposit system. This is true for all four types of single use drink containers examined. All in all, Denmark bears a net social cost of 6.7 to 8.1 million Euros per year compared to a baseline of incineration with energy recovery.