London Clearing: Ultra Low Emission Zones Calling for Well-Being

In response to rising urban air pollution, European cities have adopted Low Emission Zones (LEZs), restricting the most polluting vehicles. While effective in improving air quality, these policies remain controversial due to concerns over fairness and acceptability. This paper examines the impact of London’s 2021 and 2023 Ultra Low Emission Zone (ULEZ) expansions on subjective well-being (SWB). Using panel data from the UK Household Longitudinal Study and a staggered difference-in-differences design with individual and year fixed effects, we compare changes in life satisfaction among residents inside and outside the affected areas. We find that the 2021 expansion led to a decline in life satisfaction by approximately 0.4 points – which doubles for low-income households – with no evidence of pre-existing differential trends. We do not detect statistically significant effects within the available post-treatment window on Londoners living in the expanded zone in 2023. We explore the mechanisms driving this decline and find that the well-being loss is fundamentally mediated by car dependency and transport mode availability. While the policy increased reliance on public transport, we show that a higher accessibility to public transport reduces the well-being decline of Londoners. These findings suggest that LEZs can generate short-term welfare costs despite achieving behavioural change, highlighting the need for complementary measures to enhance social acceptability.