Effects of the London Congestion Charge on Air Quality: A Regression Discontinuity Approach by Marco Percoco

ABSTRACT

This paper aims to evaluate the causal effect of the London Congestion Charge on the level of pollution. To this end, we have assembled a unique dataset. This consists of daily observations, concentrating on five pollutants: PM10, O3, CO, NOX, SO2.
By using a regression discontinuity design in time series; with thresholds centered on the dates of the introduction of the charge, a negligible and adverse impact of the charge is documented. It emerges that the road pricing scheme has induced a decrease in the concentration O3 in the whole city, a significant decrease in the concentration of PM10 and NOX, in the charged area and an increase in surrounding areas. Similar results, although not significant at conventional levels, are found in the case of CO and SO2. These findings are consistent with an overall increase in traveled kilometers, due to traffic diversion from the charged to the uncharged area. Furthermore, there is an unclear, possibly adverse, impact of increased speed on pollution.

MARCO PERCOCO is Associate Professor of Applied Economics, Department of Policy
Analysis and Public Management, and CERTeT, Bocconi University, Milan.
marco.percoco@unibocconi.it