ǸԹ

Skip to main content
Guidance

Air quality appraisal: damage cost guidance

Updated 28 April 2026

This guidance details the process for assessing the air quality impact of a policy or project using damage costs.

Read the assess the impact of air quality and choosing an approach pages to determine which appraisal approach is most appropriate before using this page.

1. Description

The Department for Environment, Food and Rural Affairs (Defra) have developed ‘damage costs’ and ‘activity costs’ to enable proportionate analysis when assessing air quality. Damage costs and activity costs are a set of pre-calculated values, which are derived using themore detailed Impact Pathways Approach (IPA).

Damage costs are measured per tonne of emissions and activity costs are expressed in pence per kilowatt hour or pence per litre of fuel consumed. They only consider impacts within the UK and don’t include damage from transboundary effects of UK emissions in other countries.

For further details on the development of these costs go to the .

2. Damage costs

When you know the changes in pollutant emissions and do not require the full IPA users should apply damage costs per tonne of emissions, which can be combined with emission change estimates or forecasts to provide an approximate valuation of the aggregate impacts of a policy.

Use the damage costs per tonne of emissions toolkit to calculate the net present value of the change in air pollution for your scheme. Damage costs are produced for 5 pollutants:

  • Nitrogen oxides (NOx)
  • Particulate matter (PM2.5)
  • Sulphur dioxide (SO2)
  • Volatile organic compounds (VOCs)
  • Ammonia (NH3)

There are three sets of damage costs per tonne of emissions available depending on what is most appropriate for your policy:

  • national damage costs
  • sector specific damage costs
  • large industrial processes damage costs

Sector specific damage costs and large industrial processes damage costs are only available for emissions of NOx and PM2.5. Therefore, for emissions of SO2, VOCs and NH3 the national damage costs should be used.

When the sector that PM2.5 or NOx emissions are sourced from is not known then the national average damage costs should be used. When PM2.5 or NOx emissions are sourced from a particular sector then the sector specific damage costs should be used. When PM2.5 or NOx emissions are from large industrial processes, you should use the ‘Part A sector’ damage costs.

Go to annex 1 for all damage costs per tonne of emissions data.

2.1 National damage costs

If your policy covers SO2, VOCs and NH3 emissions or PM2.5 or NOx emissions where the sector is not known then use the national average damage costs. Go to table 3 in annex 1 for the national damage costs data.

2.2 Sector specific damage costs

The impact of emissions on exposure to ambient concentrations varies for different sources and geographically, since it depends on the release characteristics of the emissions and the proximity of these emissions to centres of population. If your policy covers emissions particular to a sector (other than from large industrial processes) then use the sector specific damage costs. Go to tables 4 and 5 in annex 1.

When the specific sector the emissions are sourced from is known but the geographical area type is not, users should apply the relevant average sectoral value. For three sectors (road, rail and domestic), damage costs are provided at an additional level of granularity, split across 10 area types varying in population density from ‘Inner London’ to ‘Rural’. Please see TAG unit A5-4 marginal external costs for a detailed definition of the area types and apply the relevant damage costs when both the sector and geographical area type of the emissions are known.

2.3 Part A large industrial processes damage costs

If your policy covers emissions from large industrial processes, you should use the ‘Part A sector’ damage costs. Go to tables 6 and 7 in annex 1.

‘Part A processes’ refer to emissions from large industrial processes. Exposure to these emissions is variable, depending on the proximity and size of the population affected and the size of the chimneystack. In the case ofNOxandPM, damage costs are provided for a breakdown of Part A sector emissions. This allows a more accurate analysis of impacts linked to air pollutants from large industrial processes.

There are 9 different categories of Part A sector emissions. You can find the relevant damage cost category for your analysis using Table 2. To identify the correct category, use the average population density over which the air pollutant changes are assessed and the height of the stack for the industrial installation.

Table 1: Part A categories

Average population density (persons per km squared) Stack height is less than or equal to 50m and all small point Stack Height more than 50m, but less than or equal to 100m Stack height more than 100m
less than or equal to 250 Category 1 Category 4 Category 7
More than 250, but less than or equal to 1000 Category 2 Category 5 Category 8
More than 1000 Category 3 Category 6 Category 9

The population density has been calculated for different areas for each stack height range. The population density areas are listed in Table 2.

Table 2: Population density areas for Part A categories

Stack Height <= 50 m and all small points Stack Height > 50, Stack Height <= 50 m and all small points
11 km x 11 km 21 km x 21 km 31 km x 31 km

2.4 Uncertainty and sensitivity analysis

The estimation of the impacts of air pollution on both health and non-health pathways is inherently uncertain. The methodology for assessing the different impact pathways is based on a number of assumptions around which there is a distribution of probable outcomes.

The IPA methodology (and therefore the damage costs) have been developed based on expert recommendations, in particular from the Committee on the Medical Effects of Air Pollution (COMEAP) and attempts to estimate the impact of air pollution based on the most up to date evidence available.

You should note that the evidence base around air quality impacts is continuously developing and therefore these costs do not necessarily account for the exhaustive list of all the potential health and non-health impacts of air pollution.

The central damage costs represent a best estimation of the current evidence, however there is uncertainty around: the emissions dispersion modelling, the interpretation of changes in air pollution concentrations into impacts and the valuation of those impacts. To account for this uncertainty a sensitivity range has been developed.

The low sensitivity range incorporates the lower bound concentration response function values, lower bound unit values for the valuation of health impacts and a lower level of life years lost assumed from short term exposure. The high sensitivity range incorporates the higher bound concentration response function values, higher bound unit values for the valuation of health impacts, a higher level of life years lost assumed from short term exposure and additional impact pathways.

For more information on the sensitivity range and additional sensitivity analysis conducted on three key parameters, go to the .

2.5 Step-by-step guide

Use this step-by-step guide, along with thedamage costs toolkit, if you want to apply damage costs. A worked example can be found in annex 2.

Step 1: identify and quantify the change in emissions

Estimate the impact on emissions from the change in activity at their source. The relationship between the activity and pollution produced is known as the ‘emissions factor’. For example, an emissions factor for road traffic is the amount of pollution produced per vehicle distance travelled.

Estimates of emissions factors are developed by the National Atmospheric Emissions Inventory (NAEI), presented in their.

Damage costs for particulate matter are expressed in terms of emissions ofPM2.5(particles of diameter 2.5µm or less). For some activities it’s more common for emissions to be expressed in terms ofPM10(particles of diameter 10µm or less) so these must be adjusted toPM2.5 emissions and then monetised using thePM2.5 damage costs. You can find a list of adjustment factors for different sectors, based on the ratio between these emissions in theNAEI, in annex 1.

Step 2: Identify which damage cost values to use

Choose whether the national, sector specific or large industrial Part A processes damage costs are most appropriate for your policy.

Step 3: Convert damage cost values to relevant base year prices

The damage cost values presented in annex 1 are in 2025 prices. You must account for inflation by using the Gross Domestic Product (GDP) deflator, adjusting the values to the price base year for the project appraisal (that’s the year in which all costs and benefits are being accounted).

Step 4: Calculate benefits for each year

Use the inflation adjusted damage costs to estimate the impact of a change in emissions for each year of the appraisal period. Multiply the expected change in emission figures from Step 1 (in tonnes) by the adjusted damage cost figures from step 3 in each year to get the annual benefit.

Step 5: Discount benefits across the period of the policy appraisal and calculate total present value

To calculate the annual present value of air pollution, multiply the undiscounted value of impacts for each year (calculated in Step 4) by the relevant annual discount factor. Discount factor for year t = 1/(1+0.015)*t, where:

  • 0.015 is the 1.5% discount rate (in line with HMT’sGreen Book guidance)
  • t is the number of years into the future that value is from the base year (year 0)

Present value = valued benefit x discount factor

The base year should be the current year in which the appraisal is being carried out. The discount factor for the base year is 1, and the following year (year 1) the discount factor is 0.985 after discounting at 1.5%”. The total present value is the sum of the present value of impacts in all appraisal years.

Step 6: Sensitivity analysis

In addition to the central damage cost estimates, use low and high damage cost estimates for sensitivity analysis. Repeat steps 3 to 6 using the high and low sensitivity damage cost values to generate present values of impacts for those sensitivities.

3. Activity costs

When you do not know the changes in pollutant emissions but do know the changes in fuel consumption, use ‘activity costs’ to estimate the impact of air quality.

The activity costs are calculated by combining NAEIemission factors forNOx,PM2.5andSO2with the appropriate damage costs. The total costs summed across the three pollutants calculate the activity cost values for each fuel type.

The activity costs are published by the Department for Energy Security and Net Zero (DESNZ) as part of theEnergy Use and Greenhouse Gas Emissions Supplementary Guidance to the Green Book. The activity costs are listed in ‘Data tables 1 to 19: supporting the toolkit and the guidance’, specifically tables 14 and 15 (note that DESNZalign the price base with other values within their workbook).

Activity costs are expressed in pence per kilowatt hour (p/KWh) and associated with specific fuel types:

  • Electricity
  • Gas
  • Coal
  • Oil
  • Biomass
  • LPG
  • Peat
  • Petroleum
  • Coke

Data on each fuel type is provided across geographical specifications: National average, Inner conurbation, Urban big, Urban medium, Urban small and Rural)

Activity costs are also provided for the transport sector, expressed in pence per litre consumed (p/litre) by vehicle type:

  • Car, petrol
  • Car, diesel
  • LGV, petrol
  • LGV, diesel
  • Rigid LGV, petrol
  • Articulated HGV, diesel

Data on each vehicle type is provided across geographical specifications: Transport average, Central London, Inner London, Outer London, Inner conurbation, Outer conurbation, Urban big, Urban large, Urban medium, Urban small and Transport rural.

4. Annex 1: 2025 damage costs data

4.1 Damage costs per tonne of emissions data

The following tables show the full set of updated damage cost values, in 2025 prices, alongside the low and high sensitivities. In Tables 4 and 6 the final column also displays the conversion factor required to estimate impacts ofPM10emissions.

Table 3: national damage costs (2025 prices)

Pollutant emitted Central damage cost (£/t) Damage cost sensitivity range (£/t): low Damage cost sensitivity range (£/t): high
NOx £10,193 £1,671 £34,546
SO2 £26,193 £9,158 £72,022
NH3 £9,900 £3,376 £27,868
VOC £150 £90 £277
PM2.5 £114,411 £40,026 £371,654

Table 4: PMsource sector damage costs (2025 prices)

Pollutant emitted Central damage cost (£/t) Damage cost sensitivity range (£/t): low Damage cost sensitivity range (£/t): high PM2.5/PM10conversion factor
PM2.5industry (area) £170,576 £61,511 £787,110 0.220
ʲ2.5dz £146,671 £50,747 £404,555 0.929
ʲ2.5dzپ £109,172 £37,747 £297,946 0.977
ʲ2.5DZԳٲ £182,830 £63,652 £554,483 0.633
PM2.5road transport £121,222 £42,305 £380,527 0.564
ʲ2.5ڳ £146,743 £51,084 £444,486 0.636
ʲ2.5ǴڴڰDz £89,066 £30,825 £246,788 0.909
ʲ2.5 £111,755 £38,690 £311,294 0.888
ʲ2.5󾱱 £65,693 £22,723 £180,426 0.947
ʲ2.5ɲٱ £106,862 £36,976 £295,121 0.923
ʲ2.5ܱٳܰ £35,416 £12,934 £184,157 0.177
ʲ2.5dzٳ £149,541 £51,762 £415,338 0.899
PM2.5road transport central London £648,110 £226,292 £2,048,400 0.551
PM2.5road transport inner London £628,530 £219,583 £2,002,690 0.537
PM2.5road transport outer London £353,225 £123,383 £1,123,061 0.541
PM2.5road transport inner conurbation £253,612 £88,530 £798,916 0.557
PM2.5road transport outer conurbation £159,099 £55,524 £499,532 0.563
PM2.5road transport urban big £152,869 £53,356 £480,719 0.561
PM2.5road transport urban large £122,884 £42,888 £386,116 0.562
PM2.5road transport urban medium £99,639 £34,775 £313,066 0.562
PM2.5road transport urban small £84,998 £29,664 £266,921 0.563
PM2.5road transport rural £49,192 £17,163 £153,912 0.570
ʲ2.5 transport central London £558,441 £193,113 £1,527,561 0.966
ʲ2.5 transport inner London £709,957 £245,507 £1,941,808 0.966
ʲ2.5 transport outer London £456,691 £157,929 £1,249,411 0.965
ʲ2.5 transport inner conurbation £266,139 £92,033 £728,001 0.966
ʲ2.5 transport outer conurbation £145,097 £50,181 £397,628 0.957
ʲ2.5 transport urban big £158,795 £54,916 £434,845 0.961
ʲ2.5 transport urban large £119,759 £41,449 £332,076 0.906
ʲ2.5 transport urban medium £89,462 £30,949 £246,241 0.938
ʲ2.5 transport urban small £73,313 £25,389 £205,259 0.868
ʲ2.5 transport rural £45,868 £15,892 £129,411 0.839
PM2.5 domestic central London 862,547 £298,193 £2,348,976 0.987
PM2.5 domestic inner London £733,939 £253,754 £2,001,566 0.980
PM2.5 domestic outer London £394,288 £136,326 £1,075,708 0.978
PM2.5 domestic inner conurbation £292,459 £101,120 £798,172 0.977
PM2.5 domestic outer conurbation £182,873 £63,230 £499,094 0.977
PM2.5 domestic urban big £156,677 £54,173 £427,606 0.977
PM2.5 Domestic urban large £143,176 £49,504 £390,775 0.976
PM2.5 domestic urban medium £107,392 £37,132 £293,097 0.977
PM2.5 domestic urban small £86,151 £29,788 £235,129 0.976
PM2.5 domestic rural £50,279 £17,384 £137,214 0.977

Table 5: NOxsource sector damage costs (2025 prices)

Pollutant emitted Central damage cost (£/t) Damage cost sensitivity range (£/t): low Damage cost sensitivity range (£/t): high
NOxindustry (area) £12,228 £1,868 £41,837
dz £21,315 £2,747 £74,389
dzپ £18,998 £2,523 £66,089
DZԳٲ £21,796 £2,794 £76,114
NOxroad transport £13,631 £2,004 £46,863
ڳ £17,172 £2,346 £59,547
ǴڴڰDz £11,431 £1,791 £38,982
£13,241 £1,966 £45,465
󾱱 £3,623 £1,036 £11,011
ɲٱ £11,422 £1,790 £38,949
ܱٳܰ £4,724 £1,142 £14,956
dzٳ £4,442 £1,115 £13,945
NOxroad transport central London £72,737 £7,721 £258,606
NOxroad transport inner London £71,618 £7,613 £254,598
NOxroad transport outer London £40,048 £4,559 £141,501
NOxroad transport inner conurbation £28,927 £3,483 £101,658
NOxroad transport outer conurbation £18,365 £2,462 £63,823
NOxroad transport urban big £17,655 £2,393 £61,279
NOxroad transport urban large £14,307 £2,069 £49,286
NOxroad transport urban medium £11,630 £1,810 £39,695
NOxroad transport urban small £10,012 £1,654 £33,899
NOxroad transport rural £5,944 £1,260 £19,323
transport central London £83,509 £8,764 £297,196
transport inner London £80,591 £8,483 £286,738
transport outer London £51,611 £5,681 £182,916
transport inner conurbation £31,508 £3,737 £110,898
transport outer conurbation £17,233 £2,357 £59,752
transport urban big £18,074 £2,439 £62,763
transport urban large £14,422 £2,087 £49,677
transport urban medium £10,937 £1,750 £37,191
transport urban small £8,867 £1,551 £29,774
transport rural £5,960 £1,271 £19,355
dzپ central London £92,180 £9,612 £328,231
dzپ inner London £87,005 £9,113 £309,690
dzپ outer London £53,260 £5,849 £188,798
dzپ inner conurbation £34,167 £4,003 £120,397
dzپ outer conurbation £22,755 £2,900 £79,511
dzپ urban big £20,114 £2,645 £70,045
NOxDomestic urban large £17,188 £2,363 £59,561
dzپ urban medium £13,097 £1,968 £44,902
dzپ urban small £10,618 £1,730 £36,020
dzپ rural £6,403 £1,323 £20,916

Table 6: PMPart A sector damage costs (2025 prices)

Pollutant emitted Central damage cost (£/t) Damage cost sensitivity range (£/t): low Damage cost sensitivity range (£/t): high PM2.5/PM10conversion factor
PM2.5Part A category 1 £12,917 £4,478 £36,781 0.807
PM2.5Part A category 2 £59,137 £20,486 £166,364 0.850
PM2.5Part A category 3 £230,713 £80,004 £659,233 0.795
PM2.5Part A category 4 £5,329 £1,848 £15,289 0.782
PM2.5Part A category 5 £8,098 £2,810 £23,389 0.761
PM2.5Part A category 6 £25,534 £8,857 £73,279 0.781
PM2.5Part A category 7 £1,481 £513 £4,234 0.792
PM2.5 Part A category 8 £4,177 £1,450 £12,082 0.757
PM2.5 Part A category 9 £9,173 £3,195 £28,040 0.616

Table 7: NOxPart A sector damage costs (2025 prices)

Pollutant emitted Central damage cost (£/t) Damage cost sensitivity range (£/t): low Damage cost sensitivity range (£/t): high
NOxPart A category 1 £3,612 £1,035 £10,972
NOxPart A category 2 £4,896 £1,159 £15,572
NOxPart A category 3 £10,258 £1,678 £34,779
NOxPart A category 4 £3,097 £985 £9,125
NOxPart A category 5 £3,532 £1,027 £10,685
NOxPart A category 6 £5,255 £1,194 £16,855
NOxPart A category 7 £2,961 £972 £8,639
NOxPart A category 8 £3,364 £1,011 £10,083
NOxPart A category 9 £3,650 £1,038 £11,105

4.2 Activity costs data

For activity costs data refer to ‘Energy Use and Greenhouse Gas Emissions Supplementary Guidance to the Green Book’.

The activity costs data is within ‘Data tables 1 to 19: supporting the toolkit and the guidance’, specifically tables 14 and 15 (note that DESNZ align the price base with other values within their workbook).

5. Annex 2: Damage costs worked example

This section uses a hypothetical policy measure to show how the impact ofNOxis calculated using damage costs per tonne of emissions.

5.1 The hypothetical policy

A measure introducing more efficient NOx controls from vehicles and applied nationally, where:

  • one of the expected benefits of implementing this measure is the reduction ofNOxemissions
  • this measure is being assessed for 10 years, with the first year of impacts in 2026
  • the scheme is expected to reduce emissions ofNOxby 12 tonnes per year until 2028 and 3 tonnes per year thereafter, compared to a ‘do nothing’ scenario
  • the price base year for appraisal is 2023
  • the discounting year is 2026

5.2 Step 1: identify and quantify change in emissions

Table 8 shows the level of change that is expected from this hypothetical policy.

If you’re quantifying the impacts ofPM10, convert your emissions toPM2.5using the conversion factors set out inAnnex A.

Table 8: level of change inNOxemissions

Year NOxemissions reduction (tonnes)
2026 12
2027 12
2028 12
2029 3
2030 3
2031 3
2032 3
2033 3
2034 3
2035 3

5.3 Step 2: identify which damage cost values to use

For this example, as the policy is impacting vehicles and applied nationally, we’ve used theNOxroad transport damage cost of £13,631 is used.

5.4 Step 3: convertNOxdamage costs to base year

The price base year for the appraisal is 2023 in this case, so the damage costs will need to be adjusted to the new price base usingGDPdeflators (note these are likely to change over time, see‘Annual Parameters’ tab in the TAG Data Book).

Multiplying the ratio of the index values for 2023 (100) and 2025 (107.14) - so, 100.00 / 107.14 = 0.93 - by the damage cost value, gives a rebased value of £12,723.

Table 9: change in emissions (t), appropriate damage cost (£) and rebased damage cost

Year NOxemission reduction (tonnes) NOx national average road transport damage costs, central (2025 prices) Rebased to 2023 prices
2026 12 £13,631 £12,723
2027 12 £13,631 £12,723
2028 12 £13,631 £12,723
2029 3 £13,631 £12,723
2030 3 £13,631 £12,723
2031 3 £13,631 £12,723
2032 3 £13,631 £12,723
2033 3 £13,631 £12,723
2034 3 £13,631 £12,723
2035 3 £13,631 £12,723

5.5 Step 4: calculate benefits for each year

Multiply the price year adjusted damage cost values by the change in emissions (tonnes) for the corresponding years.

Table 10: calculating the total undiscounted benefit of the change in emissions

Year NOxemission reduction (tonnes) NOx national average road transport damage costs, central (2023 prices) Total undiscounted benefit
2026 12 £12,723 £152,676
2027 12 £12,723 £152,676
2028 12 £12,723 £152,676
2029 3 £12,723 £38,169
2030 3 £12,723 £38,169
2031 3 £12,723 £38,169
2032 3 £12,723 £38,169
2033 3 £12,723 £38,169
2034 3 £12,723 £38,169
2035 3 £12,723 £38,169

5.6 Step 5: discount benefits across the period of the policy appraisal to calculate total present value

Table 11 shows the present values for the hypothetical policy scenario, calculated using the 1.5% discount rate (in line with HMT’sGreen Book guidance).

The total present value of air quality impacts can then be calculated as the sum of present values across the appraisal period. For this example, the central estimate of the present value is £621,217 over the 10-year appraisal period.

Table 11: total discounted benefits of the change in emissions

Year NOxemission reduction (tonnes) Total undiscounted benefit Discount Factor Total discounted benefit
2026 12 £152,676 1 £152,676
2027 12 £152,676 0.985 £152,420
2028 12 £152,676 0.971 £148,197
2029 3 £38,169 0.956 £36,502
2030 3 £38,169 0.942 £35,962
2031 3 £38,169 0.928 £35,431
2032 3 £38,169 0.915 £34,907
2033 3 £38,169 0.901 £34,391
2034 3 £38,169 0.888 £33,883
2035 3 £38,169 0.875 £33,382
Total 57 £725,211 £695,751

5.7 Step 6: sensitivity analysis

The sensitivity range can be calculated using the same procedure but applying the low and high damage costs.

For the hypothetical policy, the high estimate of the present value is £2,391,900 and the low estimate of the present value is £102,260.

6. Annex 3: Health metrics

6.1 Health metrics description

This section discusses healthoutcomes which capture the underlying health effects of air pollution in non-monetary terms.

These metrics representtheintermediatehealthoutcomesestimated as part of (or underpinning) thedamage cost calculations.As with the damage cost values, the health metrics and the pathways captured are derived from the Impact Pathway Approach and can be broadly split into 3 metrics:

  • Mortality – Life Years Lost (LYL) per tonne of emissions

  • Morbidity – Quality-Adjusted-Life Years (QALYs) lostper tonne of emissions

  • Morbidity–Number of hospital admissions per tonne of emissions

In section 6.2, data is presented for each of the above metrics for the national damage cost values with separate tables presenting low and high estimates based on the sensitivity range. Please note that some of the hospital admission values are negative due to pathways where increased pollutant emissions result in reductions of ozone concentrations and consequently reduced estimated admissions.

These health metrics can be used forthe purposes of a simplified assessmentto approximate thehealth impacts ofmarginal changes inair pollution in the absence of concentrationdata and provide an evidence-based narrative toaccompanythe valuation of air pollution impacts using damage costs.

Please note there are multiple steps between these health metrics and their corresponding damage costs values, as the monetised damage costs also include environmental, materials and productivity pathways and apply discounting techniques.

For further information or any questions about these health metrics and how they should be used, email igcb@defra.gov.uk.

6.2 Health metrics data

Table 12: intermediate health metrics associated with national damage costs (central)

Pollutant emitted LYL / tonne QALYs / tonne Hospital admissions / tonne
NOx 0.11 0.068 0.0044
SO2 0.31 0.14 0.0069
NH3 0.11 0.049 0.0025
VOC 0.00015 - 0.0020
PM2.5 1.4 0.60 0.030

Table 13: intermediate health metrics associated with national damage costs (low sensitivity)

Pollutant emitted LYL / tonne QALYs / tonne Hospital admissions / tonne
NOx 0.043 0.0092 0.0026
SO2 0.24 0.038 -0.0045
NH3 0.086 0.014 -0.0016
VOC 0.000027 - 0.00080
PM2.5 1.0 0.17 -0.020

Table 14: intermediate health metrics associated with national damage costs (high sensitivity)

Pollutant emitted LYL / tonne QALYs / tonne Hospital admissions / tonne
NOx 0.21 0.22 0.012
SO2 0.35 0.47 0.022
NH3 0.13 0.18 0.0081
VOC 0.00038 - 0.0034
PM2.5 1.5 2.6 0.098