The Well-Being Costs of Low Emission Zones: Evidence from London's ULEZ Expansions

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. We explore the mechanisms driving this decline and find that the well-being loss is mediated by car dependency and transport mode availability. While the policy increased reliance on public transport, we show that a better accessibility to public transport mitigates the decline in life satisfaction among London residents. Furthermore, we show that the well-being costs of the policy are regressive, disproportionately affecting lower-income households. These findings suggest that LEZs can generate short-term and unequal well-being costs despite achieving modest behavioural change, highlighting the need for complementary measures to enhance social acceptability.