This paper examines the effects of German low emission zones on air pollution by particulate matter from road traffic. Low emission zones have become a popular tool for policy makers to ensure compliance with EU air quality legislation, but empirical evidence about their effectiveness is still missing. This study tests for average and heterogeneous treatment effects by using a difference-in-differences approach on station-level PM10 panel data for the years 2004 – 2010. Using fixed effects to control for unobserved heterogeneity, the results suggest that the policy fails to reduce average PM concentrations, while it shows some success in reducing the number of days with excessively high pollution. This effect is limited to highly polluted and large cities and applies only to the very local environment. It is thus concluded that low emission zones only work under very specific conditions and should not be the ultimate tool policy makers rely on when trying to improve air quality.
Keywords: Air pollution, PM10, difference-in-differences, environmental policy, local traffic pollution policies