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The benefits and costs of informal sector pollution control: Mexican brick kilns

Published online by Cambridge University Press:  02 October 2006

ALLEN BLACKMAN
Affiliation:
Resources for the Future
JHIH-SHYANG SHIH
Affiliation:
Resources for the Future
DAVID EVANS
Affiliation:
Resources for the Future
MICHAEL BATZ
Affiliation:
Resources for the Future
STEPHEN NEWBOLD
Affiliation:
National Center for Environmental Economics, US Environmental Protection Agency
JOSEPH COOK
Affiliation:
Department of Environmental Sciences and Engineering, University of North Carolina, Chapel Hill

Abstract

In developing countries, the rapid proliferation of informal firms – low-technology unlicensed micro-enterprises – is having significant environmental impacts. Yet environmental management authorities typically ignore such firms. This paper estimates the annual net benefits (benefits minus costs) of controlling particulate emissions from a collection of informal brick kilns in Ciudad Juárez, Mexico and from two of the city's leading formal industrial polluters. We find that the annual net benefits of controlling brick kiln emissions are substantial – in the tens of millions of dollars – and exceed those for the two formal industrial facilities by a significant margin. These results suggest that, in some cases, the conventional allocation of pollution control resources across formal and informal polluters may be suboptimal.

Type
Research Article
Copyright
2006 Cambridge University Press

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Footnotes

We are grateful to the Tinker Foundation for financial support; Lisa Crooks, Andres Lerner, and Alejandra Palma for excellent research assistance; Francisco Alfaro, Charles Bruce, Bob Currey, Anders Johnson, Antonio Lara, Wen-Whai Li, Robert Marquez, Jesus Reynoso, Carlos Rincon, Allyson Siwik, Gerardo Tarin, Victor Valenzuela, Adrián Vázquez, and Rebecca Wong for help with field research and data collection; and Alan Krupnick, the editor, and three anonymous referees for helpful comments and suggestions. Remaining errors are our own.