Changes on the international level have led to the development of “global governance,” described as a global system in which states are no longer the main sources of power. One of the most salient challenges to emerging global governance practices is the development of transnational criminal networks. The author refers to the emergence of transnational criminal networks as “criminalization,” which is further defined as the illegal activities resulting from interactions between the formal and informal sector and between global and local actors. The illicit networks converge to create “shadow states” in which politicians and the business community wield political power through their control of illicit markets. Shadow states retain this power by manipulating the formal and official state institutions to create conditions favorable to their illicit activities. The ways in which shadow states challenge environmental management by legitimate state structures in Madagascar and Belize are examined. A decaying central state authority in Madagascar contributed to the development of a shadow state and the proliferation of the illicit sapphire mining industry in Madagascar, which is having a negative environmental impact. Illegal gem mining threatens the Isalo National Park, an important part of Madagascar’s conservation estate, and contributes to the pollution of the water supply and to a number of significant social problems, such as gambling and prostitution, all of which has been exacerbated by a lack of formal regulation. Offshore finance and drug trafficking in Belize offers an example of how shadow states can prevent effective implementation of environmental governance at both the national and global levels. The author illustrates how a shadow decisionmaking process determined the fate of environmental legislation designed to curb Belize’s many environmental breaches. These cases illustrate that shadow networks must be considered in an examination of the causes and dynamics of environmental change. Footnotes