How do we get people to cut out the polystyrene? Tax the ever-loving shit out of it. How do we deal with the externalities of that? Dunno. I've learned in my dotage that the intractable problems usually have several proposed solutions, all of which have their drawbacks and all of which have their fervent opponents. California attempted to limit the amount of glass waste by putting a deposit on bottles. Then that deposit ended up being appropriated by the legislature. Then to make it harder to reclaim your fees they eliminated everywhere convenient. The west side of Los Angeles has two locations where you can get your deposit back. Whenever you attempt to fuck with the free market, the free market fucks with you double.
Wait, how did they manage to screw up bottle deposits? Us Europeans have been doing those for ages and they seem to work fine. Here in Finland all glass and plastic beverage bottles have deposits, so the recycling rate is really high (and we actually recycle them, not just offload them to some poorer country)
From a larceny standpoint they didn't screw anything up - they take your money and keep it. As a tax it's fine. As an incentive to recycle, closing down the places you can get your deposit back limits the incentive to hold onto your bottles. It doesn't help that Waste Management, the company that gets the recycling contract, is mafia-owned.