Many years ago the city where I lived at that time, had a nice initiative: a recycle bank. People could earn and save money by “depositing” trash. There were three categories of trash which could be turned in: paper/cardboard, plastic and textile. Each category had its own price.
Trash could be deposed for cash at several places in town. In my neighborhood the trash collection station was located in front of the local shopping mall.
The project was quite successful, I had to stand in a queue at many time I wanted to depose my trash. Nevertheless, the project was cancelled, as the city council decided pull the subsidy.
The mayor of Curitiba (Brazil) paid the inhabitants of the slums with bus tokens in exchange for their trash collection. A quite successful initiative as the residents of the slums were eager to collect their trash in order to earn bus tokens, which were also used as a currency in the neighborhood.
Litter is a great problem in many urban areas. And punishing people for littering does not work as there is little change that one will be caught. Rewarding people for collecting litter makes more sense, the more litter one collects the higher his reward will be. This reward could be anything from cash to bus tokens to free meals.
And no, rewarding people for collecting litter does not need to be expensive. By cleverly selecting rewards, much money could be saved in this way.
Trash-for-cash schemes can be funded without burdening the tax-payer. The idea of recycling is that waste is also a resource and hence has some value.
In regard of textile recycling, it would make sense to award people with a discount on new clothes if they return their old clothes. These could then be recycled and hence reducing the demand for new textile.
A similar scheme can be used for other goods like consumer electronics, bikes and so on. Turn your old one in and get a discount on your new one.