WEAI/AERE 2009 - Individual Paper Abstract
Title: Cars, Air Pollution and Low Emission Zones in Europe
Author(s): Lisa Perry, Hendrik WOLFF, University of Washington (picture: Thessaloniki parallel parking outside EAERE 2007 conference hotel, TAC)
In response to increased concern about the health dangers posed by ambient particulate matter (PM), the European Union (EU) Clean Air directive of 2005 introduced stringent EU-wide limits on PM10 levels. As a consequence, Low Emission Zones (LEZs) have become a popular, yet controversial, policy employed across Europe. LEZs define an area of a city where there are substantial driving restrictions on certain higher-polluting vehicles. The large social costs these zones pose on inhabitants, drivers and business owners underscore the need for an empirical assessment of these zones effectiveness. To this end, our paper analyzes the effect of LEZs in Germany. Germany has categorized all of its 44 million vehicles into four mutually exclusive classes of PM10 emissions, indicated by different color windshield stickers. Between January and October 2008, 22 German cities implemented LEZs which limit vehicular access to specific areas depending on the color of the sticker, with 25 to 40 more LEZs planned in 2009 and beyond.
To study the direct causal effect of LEZs, we have collected a panel data of hourly PM10 levels across Germany from 2001 through 2008. First, choosing appropriate control cities, we use a differencein- differences to estimate the treatment effect of implementing an LEZ after controlling for weather and local urban business activity measures. For these analyses, both the EU-imposed selection rule and the staggered nature of LEZ implementations produce rich identification of the zones' treatment effects. First, we compare LEZ cities to cities with similar PM10 levels that are not in violation of the EU regulation. We can further identify the effects of LEZs beyond other air pollution policies by comparing LEZ cities to violating cities not implementing LEZs and cities whose LEZ takes effect relatively later than the 'first-moving' implementers. To further understand the effects of LEZs on pollution levels within a city, we look at differences in PM10 levels at PM10 monitoring stations inside and outside of LEZs within LEZ cities. Finally, to ensure our results are not driven by systematic differences between control and treatment cities, we employ a regression discontinuity approach that compares PM10 levels within a city immediately before and after implementation of an LEZ.
One important argument in favor of the four-tier PM10 categorization is that it leads to a more rapid adoption of cleaner technologies since even vehicle owners who do not typically drive into a LEZ may want to keep the option value of free passage. To test whether LEZs have this effect on technology adoption, we collect a unique panel dataset that provides the emission category and registration location of each private- and commercially-owned German vehicle. Using this data for the entire universe of German vehicles from 2006 to 2008, we estimate whether the distance of the vehicle to the next LEZ can explain the adoption behavior of low emission vehicles.