[ ▸ Abstract | draft coming soon ]

Large rates of urbanisation come with externalities arising from density. These are particularly pronounced in the case of uncontrolled trash disposal. Low enforcement and fiscal capacity make local governments slow to respond to these challenges and leave space for unregulated private provision, which fails to address vast environmental and health damages. We develop a smartphone application and conduct surveys with households and informal waste collectors, to map the whole market and infrastructure for trash collection and disposal in Accra, Ghana. Leveraging experimental variation and our rich bespoke data, we estimate a structural model that captures the decisions of households, informal collectors, and disposal site operators. Counterfactual results show that halving fees at waste transfer stations correct unpriced externalities up to the social planner's choice. Welfare gains exceed policy implementation costs, but these are substantial, reaching 55% of the current budget for solid waste management. The construction of planned new infrastructure achieves lower effectiveness and requires higher costs than pricing policies. In settings with low fiscal and regulatory capacity, where direct provision, bans, or first-best pollution taxes are not feasible, limited second-best regulation can internalise environmental costs, providing a path for public service delivery through informal markets.