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on Resource Economics |
| By: | Burgess, Robin (Department of Economics, LSE); Greenstone, Michael (Department of Economics, University of Chicago); Ryan, Nicholas (Department of Economics, Yale University); Sudarshan, Anant (Department of Economics, University of Warwick) |
| Abstract: | Off-grid solar promises a low-cost and carbon-free path to electrification. But will poor households choose off-grid power? We run a multi-year pricing experiment in rural India to estimate demand over all electricity sources, including off-grid solar, diesel generators, and both formal and informal connections to the grid. We find that off grid solar is an important stop-gap, but households value grid electrification five times more. The grid, however, decreases global surplus, both because household payments do not cover the cost of supply, in an environment with high informality, and because grid connections increase carbon damages. We apply our model to data from Africa and find a similarly strong preference for the grid among households there, underscoring the external validity of our results. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:814 |
| By: | Nicolás Forteza (BANCO DE ESPAÑA); José M. Labeaga (UNIVERSIDAD NACIONAL DE EDUCACIÓN A DISTANCIA, SPAIN) |
| Abstract: | Low emission zones (LEZs) have emerged as a primary policy instrument to combat urban air pollution in Europe, yet rigorous evidence on their effectiveness and spatial spillovers remains limited. Using a high-resolution geospatial panel dataset covering 1km grid cells across 33 European countries from 2007 to 2022, we estimate that LEZ adoption reduces PM2.5 exposure by approximately 4% within designated zones. We find robust evidence of positive spillovers: pollution also declines in areas adjacent to LEZ boundaries. These average effects mask substantial heterogeneity: reductions are concentrated in larger, denser cities and in cities with medium-sized zones relative to total urban area, while the smallest cities and zones show no detectable effect. These findings suggest LEZs generate city-wide environmental benefits extending beyond formal boundaries, consistent with network effects and technology spillovers dominating displacement mechanisms. To contextualize these results, we estimate the pollution-density elasticity for European cities using instrumental variables based on historical settlement patterns, finding that a 1% increase in population density raises PM2.5 exposure by 6% (approximately half the magnitude documented for US cities). We interpret our findings through a spatial equilibrium model that formalizes how LEZs alter the pollution production function in monocentric cities. Our results indicate that moderate-stringency LEZs, as typically implemented across Europe, deliver meaningful aggregate pollution reductions of approximately 1.8% city-wide, with modal shift complementarities and fleet renewal mechanisms dominating traffic displacement effects. |
| Keywords: | low emission zones, air pollution, PM2.5, urban density |
| JEL: | I10 Q53 Q58 R11 R12 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2621 |