The Distributional Effects of Low Emission Zones: Who Benefits from Cleaner Air?

Low emission zones (LEZ) represent a key environmental policy instrument to address air pollution in cities. LEZs have reduced air pollution and associated health damages in regulated areas, but it remains unclear who has benefited from cleaner air. To examine the distributional effects of LEZs, we combine gridded data on resident characteristics, including income and a proxy for ethnicity, with high-resolution estimates of fine particle (PM2.5) concentrations in Germany, the country with the highest number of LEZs. We estimate heterogeneous treatment effects with a difference-in-differences approach and show that PM2.5 pollution reductions are distributed unequally across society. While residents with German name origins experience larger improvements within LEZs, residents with foreign names disproportionately live in LEZs and thus benefit more when assessed at a nationwide scale. Monetizing air quality benefits following governmental guidance, we find that they are distributed pro-poor within LEZs, disproportionately benefiting lower-income residents. From a nationwide perspective, benefits are distributed almost proportionally although the sign is sensitive to how benefits from cleaner air scale with income. Overall, our results suggest that LEZs have nuanced distributional implications that differ sharply between a national perspective and local assessments that focus on effects within LEZs.