ABSTRACT
I n the mid-1990s , following a series of orders from the Supreme Court of India, hundreds of mainly small-scale tanneries in the Palar Valley of Tamil Nadu were threatened with closure if they failed to comply quickly with regulations requiring them to treat their effluents. In this crisis situation, the vast majority of tanneries cooperated with each other to build and operate common effluent treatment plants (CETPs), an option encouraged by government subsidies for these plants. The result has been a dramatic reduction in tannery water pollution. This experience offers valuable insights into the role that joint action—cooperation among industrial enterprises—can play in greening clusters of small-scale enterprises (SSEs). In particular, it holds lessons regarding the factors that facilitate and deter such cooperation. It also demonstrates how the threat of sanctions can be combined with inducements and subsidies to encourage improved environmental performance.
