Keep Your Clunker in the Suburb: Low Emission Zones and Adoption of Green Vehicles

65 Pages Posted: 24 May 2014

See all articles by Hendrik Wolff

Hendrik Wolff

University of Washington - Department of Economics; IZA Institute of Labor Economics

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Spatial distribution and leakage effects are of great policy concern and increasingly discussed in the economics literature. Here we study Europe's most aggressive recent air pollution regulation: Low Emission Zones are areas in which vehicular access is allowed only to vehicles that emit low levels of air pollutants. Using new administrative datasets from Germany, we assess the distribution of air pollution and the spatial substitution effects in green versus dirty vehicles.We find that LEZs decrease air pollution by around nine percent in urban traffic centers while pollution is unchanged in non-traffic areas. These results are driven by our finding that vehicle owners have an incentive to adopt cleaner technologies the closer they live to an LEZ. We reject the widespread concern that dirty vehicles contribute to higher pollution levels by increasingly driving longer routes outside of the LEZ. Back of the envelope calculations suggest that the health benefits of roughly two billion dollars have come at a cost of just over 1 billion dollars for upgrading the fleet of vehicles. Moreover, we find that non-attainment cities that decided not to include an LEZ but engaged in other methods (building ring roads, enhancing public transportation), experience no decrease in pollution.

Keywords: low emission zones, air pollution, PM10

JEL Classification: Q58, R48

Suggested Citation

Wolff, Hendrik, Keep Your Clunker in the Suburb: Low Emission Zones and Adoption of Green Vehicles. IZA Discussion Paper No. 8180, Available at SSRN:

Hendrik Wolff (Contact Author)

University of Washington - Department of Economics

Box 353330
Seattle, WA 98195-3330
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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