For US policymakers and citizens who are grappling with the question of how tohandle this country's mounting municipal garbage and commercial wastes, this report offers a revolutionary approach taken by Germany to promote both recycling and source reduction. The sweeping new German legislation is stimulating industry efforts to reduce packaging and product waste by requiring that the businesses producing packages and products be financially responsible for taking back their used materials and recycling, reusing or disposing of them. The Germans call the concept underlying their legislation, "making the polluter pay. 11 Their approach is especially intriguing because it directly rewards business innovation. Businesses that move most rapidly and effectively to cut back packaging wastes and to make products that last longer and are more easily repaired and recycled will incur the lowest recycling and disposal costs. The US public and private sectors are trying to deal with an increasing solid waste crisis - 252 million Americans produce more than 4 pounds of garbage per person per day - a rate that is projected to increase; how to manage 196 million tons of municipal solid waste generated each year; about the costs and political resistance to new landfills and incinerators for waste disposal; and about the complex and expensive processes required to advance recycling. This report describes what Germans have done in solid waste policies, the difficulties they are confronting and the impact on wastes to date. It discusses the environmental problems that the US and other industrialized countries face, identifies practical solutions: programs and policies that work to conserve our valuable air, land, water and natural resources and enable us to live and do business less wastefully.