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''What many people don't realise is that every single-use cup has a plastic bladder inside it to stop leakage and make it waterproof, and you can't recycle it and they all go to landfill,'' Federal Diner owner Brona Parsons said.
''Even the eco coffee cup that uses plant-based plastic goes to landfill because there are no facilities to recycle them in our district.''
The idea to introduce a mug-lending scheme was floated at a session of hospitality workers at the ONE New Zealand sustainability workshop in Wanaka last year.
Ms Parsons chaired the session and together with Sophie Ward, of Plastic Free Wanaka, applied to the Queenstown Lakes District council for a waste minimisation community grant.
Ms Parsons said they were awarded $10,000, which would be spent on educating the public to change their behaviour when it came to drinking coffee.
Several Wanaka cafes had already signed up to the cup-lending trial, which would start during the second ONE New Zealand sustainability festival in October.
Ms Parsons said not-for-profit Wellington social enterprise company Again Again would supply the cafes with reusable steel cups with silicone lids and cardboard heat sleeves.
Customers would pay a $3 refundable deposit for the cup on top of the charge for their coffee.
The scheme was launched in Wellington last year and was about to start in Auckland.
Ms Parsons said it would be different in Wanaka, as it was a tourist town and with that came the risk tourists might want to ''souvenir'' the mug.
Ms Parsons said she and Ms Ward hoped to make Wanaka totally single-use cup-free by 2022.