we don't know yet, but they said in the news that there should be a use for it later in the event. I would save it if I were you :)
the Recycle Beast used the fast food straws/wrappers/sodacups that we picked up from the Centropolis Garden Project, and gave Recycle Points for them. He may have a use for Festival Litter, too.
Oatmeal eats paper today. If all those worries empty him out before he gets proper food, he may be in need of some Festival Litter. :)
Even if neither of those uses come to be, it will still be a Holiday Item, and you will be able to use it in a Quentin's Quest. Some of the wreckage from the Atebus Historical Society site event is worth sP now.
[edit] I just found a piece of it here in the H&Q Forum, when I was not in the Festival. I haven't had that happen before. Up 'til now, I've only seen it on Festival pages.