The new Love NZ recycling initiative, "It's a Karma Thing", has been launched by Dunedin Mayor Dave Cull.
The scheme will reward people who use public recycling bins over the next six weeks with "Karma credits", which can be spent at an online auction.
"It's about coming up with good models and the council has already developed a waste-minimisation strategy. The ultimate goal should be to see waste packing as a resource and get as much out of the waste stream as we can," Mr Cull said.
"Most commonly used packaging can be recycled. We want to have no waste."
The Dunedin City Council installed 59 new Love NZ recycling bins, which separate plastic and aluminium food and drink containers, before the 2011 Rugby World Cup.
"We have collected more than 150 tonnes of material for recycling since then," Mr Cull said.
"A lot of packaging can be recycled and we want to be looking at what we can be taking out of the waste stream."
The online auction site is www.karmathing.co.nz
