Each time we deport an illegal immigrant there should be an outstanding charge of $100,000 plus the cost of deportation attached to that individual. In addition, the illegal immigrants nation of citizenship should be charged $100,000 as well as the crossing nation; these funds should be collected via tariffs.
Obviously the illegal immigrant isn't going to pay the fine. But if they get caught again, we jail them and put them to work at minimum wage to pay off their fine (two since they are a repeat offender).
We don't want them to engage in labor that would be better off in the free market, so I have a solution. Something that would be nice to get done, but wouldn't make a dent in the free market labor pool: have them dig rainwater harvesting holes in the desert areas of America to catch rainwater. A 2-4 foot deep hole, 5-10 feet wide placed every 20-30 feet would turn huge areas green. In a few decades it would be enough to turn the entire southwest into a green patch.
Interesting proposal... but there are ALWAYS unintended consequences and unforeseen problems with any plan. I have traveled extensively throughout Central and South America and know how these things go, I've seen them.
"Temporary" towns would spring up near these digs, which would in time become permanent slums. Slum lords, gangs, drugs, and trafficking of all sorts would make these places "no man's land" for age.
Your plan sounds nice, but I think we should just deport these vermin before they become a permanent stain on our country.
They would be prison labor, so the only towns that would pop up would be for prison employees.