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Air pollution and the housing market: Evidence from Germany's Low Emission Zones

Author

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  • Gruhl, Henri
  • Volkhausen, Nicolas
  • Pestel, Nico
  • aus dem Moore, Nils

Abstract

This paper studies whether people's perception of improvements in local air quality are reflected in the housing market based on comprehensive data on real estate prices from Germany. Using a quasi-experimental research design, we exploit the staggered introduction of Low Emission Zones (LEZs) across German cities, lowering urban air pollution by limiting the access of high-emitting vehicles. We find that residents value the presence of LEZs, reflected by roughly 2% higher apartment rents. Estimates are similar, albeit smaller in magnitude, for properties for purchase. The results are driven by earlier LEZ implementations and LEZs in areas with relatively higher pre-intervention pollution levels.

Suggested Citation

  • Gruhl, Henri & Volkhausen, Nicolas & Pestel, Nico & aus dem Moore, Nils, 2022. "Air pollution and the housing market: Evidence from Germany's Low Emission Zones," Ruhr Economic Papers 977, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:977
    DOI: 10.4419/96973142
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    More about this item

    Keywords

    Low emission zone; policy evaluation; house prices; externalities;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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