Guidance

Air quality appraisal: choosing an approach

Updated 16 December 2025

Approaches

There are 3 main approaches for valuing changes in air quality:

1. Impact Pathways Approach (IPA).
2. Damage costs.
3. Activity costs.

All are based on the IPA methodology, but they differ in their level of detail, data inputs required and the situations they are most suitable.

The IPA is the most detailed and granular approach. It uses dispersion modelling to estimate how emissions change ambient pollutant concentrations and the resulting health and environmental impacts.

Because the IPA accounts for the specific location and type of emission source, it is best suited to localised impacts, policies where air quality is a major part of the appraisal and when sufficient modelling capability is available.

Damage costs provide simplified, pre-calculated monetary values per tonne of pollutant emitted. They are derived from the IPA methodology but avoid the need for dispersion modelling.

Damage costs reflect average impacts and are available at a sectoral level. For three of the sectors (rail, road and domestic) they are also available across ten area types to account for differences in population density. They are appropriate when impacts are less localised, the emissions source is well represented by a particular damage cost value or rapid estimates are required.

Activity costs are also pre-calculated monetary values but are provided per unit of activity - per kWh of energy used or per litre of fuel burned - rather than per tonne of emissions. They are appropriate when an appraisal focuses on changes in energy or fuel use but aren’t least sensitive to local conditions and therefore may be the least accurate approach for site-specific impacts.

The decision on which approach to use should consider what data is available, the significance of the air quality impacts to the overall appraisal, the importance of local considerations and the timeline the appraisal is working towards. 

You should follow the decision process set out below to inform the best approach for your policy. 

Decision process

Use the decision process below to help guide which approach is best suited for your policy.

For a visual representation go to the flowchart on the assess the impact of air quality page.

For any help with this process, email igcb@defra.gov.uk.

Question 1: can you obtain data on pollutant emissions?

• Yes: Quantify emissions of pollutants and move to question 2
• No: Use activity costs if you have energy or fuel consumption data

Question 2: is the policy specific to an area or sector/activity?

• Yes: Sector specific damage costs or IPA might apply. In the first instance apply the appropriate sector specific damage costs to monetise the air quality impacts and move to question 3
• No: Use national damage costs, not IPA

Question 3: do the monetised air quality impacts significantly affect the NPV or BCR? (For example, does including the impacts change the VfM category?)

• Yes: Consider undertaking dispersion modelling to calculate concentration changes and move to question 4
• No: Approach applied in question 2 is correct, use appropriate sector specific damage costs, not IPA

Question 4: is the baseline health status of the affected population likely to differ from the national average?

• Yes: Consider using full IPA
• No: Consider using costs per unit concentration hybrid IPA approach