Informal Sector Pollution Control: What Policy Options Do We Have?

In developing countries, urban clusters of informal firms such as brick kilns and leather tanneries can create severe pollution problems. However, these firms are quite difficult to regulate for a variety of technical and political reasons. Drawing on the literature, this paper first develops a list of feasible environmental management policies. It then examines how these policies have fared in four independent efforts to control emissions from informal brick kilns in northern Mexico. The case studies suggest that: (i) conventional command and control process standards are generally only enforceable when buttressed by peer monitoring, (ii) surprisingly, clean technologies can be successfully diffused even when they raise variable costs, in part because early adopters have an economic incentive to promote further adoption, (iii) boycotts of “dirty” goods sold in informal markets are unenforceable, (iv) well-organized informal firms can block implementation of costly abatement strategies such as relocation, and (v) private-sector-led initiatives may be best suited for informal sector pollution control.