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Community Pressure and Clean Technologies in the Informal Sector: An Econometric Analysis of the Adoption of Propane by Traditional Brickmakers in Ciudad Juarez, Mexico

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  • Blackman, Allen

    ()
    (Resources for the Future)

  • Bannister, Geoffrey

Abstract

In many developing countries the informal sector, comprised of low-technology unlicensed micro-enterprises, is a major source of pollution. Environmental management in this sector is exceptionally challenging, even by developing country standards. Though clean technologies offer a means of mitigating the problem, to our knowledge there has been no rigorous empirical research on why informal (or even small-scale) firms do and do not adopt them. As a first step towards filling this gap, this paper presents the results of an econometric analysis of the diffusion of propane among informal 'traditional' brickmakers in Cd. Juárez, Mexico — a leading source of air pollution owing to their reliance on cheap, highly polluting fuels such as used tires and scrap wood. The three key policy implications of our analysis are that: (1) community pressure applied by private-sector trade and neighborhood organizations can generate strong incentives for informal firms to adopt clean technologies, presumably even in the absence of formal regulatory pressure, (2) it is possible to successfully promote the adoption of a clean technology by intensely competitive informal firms even when the new technology significantly raises variable costs, and (3) training and education — in particular the dissemination of information about the health risks associated with dirty technologies — can be an effective means of promoting adoption.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-97-16-rev.

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Date of creation: 01 Oct 1997
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Handle: RePEc:rff:dpaper:dp-97-16-rev

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  1. Blackman, Allen & Bannister, Geoffrey, 1998. "Pollution Control in the Informal Sector: The Ciudad Juárez Brickmakers' Project," Discussion Papers dp-98-15, Resources For the Future.
  2. Levy, Brian, 1993. "Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical Assessment," World Bank Economic Review, World Bank Group, vol. 7(1), pages 65-83, January.
  3. Robert S. Pindyck, 1990. "Irreversibility, Uncertainty, and Investment," NBER Working Papers 3307, National Bureau of Economic Research, Inc.
  4. Hartman, Raymond S. & Huq, Mainul & Wheeler, David, 1997. "Why paper mills clean up : determinants of pollution abatement in four Asian countries," Policy Research Working Paper Series 1710, The World Bank.
  5. Hill, Hal, 1983. "Choice of Technique in the Indonesian Weaving Industry," Economic Development and Cultural Change, University of Chicago Press, vol. 31(2), pages 337-53, January.
  6. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
  7. Pargal, Sheoli & Wheeler, David, 1996. "Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1314-27, December.
  8. Pender, John L., 1996. "Discount rates and credit markets: Theory and evidence from rural india," Journal of Development Economics, Elsevier, vol. 50(2), pages 257-296, August.
  9. Pitt, Mark M & Sumodiningrat, Gunawan, 1991. "Risk, Schooling and the Choice of Seed Technology in Developing Countries: A Meta-Profit Function Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(2), pages 457-73, May.
  10. Shrestha, Rajendra B & Gopalakrishnan, Chennat, 1993. "Adoption and Diffusion of Drip Irrigation Technology: An Econometric Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 41(2), pages 407-18, January.
  11. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S43-S63, November.
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Cited by:
  1. Sarbajit Chaudhuri, 2005. "Pollution And Welfare In The Presence Of Informal Sector: Is There Any Trade-Off?," Others 0510012, EconWPA.
  2. Dasgupta, Susmita & Lucas, Robert E. B. & Wheeler, David, 1998. "Small manufacturing plants, pollution, and poverty : new evidence from Brazil and Mexico," Policy Research Working Paper Series 2029, The World Bank.

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