Pollution, Density and Low Emission Zones: European Evidence

Nicolás Forteza and José M. Labeaga
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Nicolás Forteza: BANCO DE ESPAÑA
José M. Labeaga: UNIVERSIDAD NACIONAL DE EDUCACIÓN A DISTANCIA, SPAIN

No 2621, Working Papers from Banco de España

Abstract: Low emission zones (LEZs) have emerged as a primary policy instrument to combat urban air pollution in Europe, yet rigorous evidence on their effectiveness and spatial spillovers remains limited. Using a high-resolution geospatial panel dataset covering 1km grid cells across 33 European countries from 2007 to 2022, we estimate that LEZ adoption reduces PM2.5 exposure by approximately 4% within designated zones. We find robust evidence of positive spillovers: pollution also declines in areas adjacent to LEZ boundaries. These average effects mask substantial heterogeneity: reductions are concentrated in larger, denser cities and in cities with medium-sized zones relative to total urban area, while the smallest cities and zones show no detectable effect. These findings suggest LEZs generate city-wide environmental benefits extending beyond formal boundaries, consistent with network effects and technology spillovers dominating displacement mechanisms. To contextualize these results, we estimate the pollution-density elasticity for European cities using instrumental variables based on historical settlement patterns, finding that a 1% increase in population density raises PM2.5 exposure by 6% (approximately half the magnitude documented for US cities). We interpret our findings through a spatial equilibrium model that formalizes how LEZs alter the pollution production function in monocentric cities. Our results indicate that moderate-stringency LEZs, as typically implemented across Europe, deliver meaningful aggregate pollution reductions of approximately 1.8% city-wide, with modal shift complementarities and fleet renewal mechanisms dominating traffic displacement effects.

Keywords: low emission zones; air pollution; PM2.5; urban density (search for similar items in EconPapers)
JEL-codes: I10 Q53 Q58 R11 R12 (search for similar items in EconPapers)
Pages: 93 pages
Date: 2026-07
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2621

DOI: 10.53479/44145

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