Externalities: Health Benefits of Low Emissions Zones

A new study finds that incentives to switch to green vehicles produce big health benefits

‘Low emission zones’ (LEZs) in major cities like London and Berlin can reduce life-threatening air pollution dramatically by encouraging drivers to switch to cleaner, greener vehicles. That is the central conclusion of research by Hendrik Wolff, published in the August 2014 issue of the Economic Journal.

His study shows that the health benefits of LEZs from cleaner air in German cities have turned out to be worth twice the costs of upgrading the country’s fleet of private and commercial vehicles. What’s more, German cities that have so far decided not to introduce an LEZ but engaged in other methods (such as building ring roads and enhancing public transport) have experienced no decrease in pollution.

Europe has over 100 LEZs, which consist of larger urban areas that either completely ban or charge a high price to ‘dirty’ vehicles entering the LEZ. The largest LEZ in Europe is in Greater London, with a population of over eight million people. All trucks of emission categories I-III pay a fee of £250-500 per day to enter the LEZ of London; only the cleanest vehicles (category IV and higher) can enter without a charge.

In Germany, Berlin has the largest LEZ, with a population of 1.1 million people. Here drivers do not have the option to pay a fee, but the LEZ of Berlin completely bans all but the cleanest vehicles from entering the city of Berlin.