Background and Objective: Waste management has always been a significant challenge for municipalities. Alongside the formal operational cycle of municipalities, other stakeholders and actors also play an informal role in urban waste management. The majority of the segregation of valuable waste is carried out by these individuals. This study presents the waste management of the city of Kerman, focusing on both formal and informal recycling collection cycles and utilizing financial permits and municipal oversight to regulate these activities.

Materials and Methods: In this study, the waste management cycle model of the city of Kerman is initially introduced, emphasizing the formal and informal recycling collection cycles. Subsequently, a simulated model in MATLAB software is presented, along with a fuzzy controller system for determining the purchase price of recyclable materials by the municipality to compete with the informal cycle.

Findings: The model's results, including the number of individuals attracted by the formal network, the municipality's revenue from the purchase and sale of recyclables, and the sale of permits for a scenario with a permit price equivalent to ten million Rials, were examined. According to the results, the existence of an activity permit tool significantly impacts the municipality's share in attracting the participation of informal collectors throughout the city.

Conclusion: To prevent protests and a lack of support for the plan, it is recommended that the permit price be lower at the initial implementation stage, and the intensity of oversight be increased as much as possible to ensure collectors are required to obtain an activity permit. Issuing activity permits can not only enhance the financial benefits for the municipality but also have positive social and environmental effects, improving the supervision of individuals' activities.
 
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