The Causal Effects of Environmental Pollution on Public Health Expenditure and Economic Growth in India: Panel Autoregressive Distributed Lag Estimation

Abstract

Increasing air pollution and the consequent degradation of environmental quality across the world are posing serious challenges to healthy living, not only through the increasing threat of global warming but also due to increased mortality and morbidity. This paper examines the short- and long-run dynamic relationship between economic growth, air pollution, and public health expenditure in 18 states of India during the period 2007 to 2021, applying panel unit root test, cointegration test, and autoregressive distributed lag (ARDL) estimation method. The ARDL model estimates the long-run dynamic interaction between the variables and distinguishes the short- and long-run effects. The panel ARDL estimates show that GSDP and air pollution have a significant positive long-run effect on public health expenditure in the states of India. The impact of carbon emissions on health expenditure is higher than the effect of GSDP. The much-desired economic growth comes at the cost of environmental degradation that increases the risk of pollution-induced health diseases including mortality, ultimately rising the public healthcare expenditure.

Keywords: Economic Growth, Air Pollution, Public Health Expenditure, Causal Effect, ARDL Estimation

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