The impact of health expenditure on environmental quality: the case of BRICS

Abstract

ABSTRACT There is a significant and deadly link between air-borne pandemics (for example, COVID-19) and air pollution, as airborne particulate matter enhances the spread of such diseases. Moreover, economically disadvantaged groups are more susceptible. This paper analyses the effects of health expenditure on carbon emissions in BRICS (that is, Brazil, Russia, India, China and South Africa) countries from 2000 to 2017. The Fully Modified Ordinary Least Square (FM-OLS), the Vector Error Correction Model (VECM) Granger causality and the Dumitrescu–Hurlin causality tests are employed. In terms of aggregate health expenditure, the level of current health expenditure is significantly and negatively connected with carbon emissions. With regard to disaggregated variables, private health expenditure is also negatively and significantly linked to emissions. However, domestic general government health expenditure and external health expenditure are positively and significantly associated with carbon emissions. Country-specific results are also provided. The causality tests confirm bi-directional causality between the level of current health expenditure, private health expenditure, and domestic general government health expenditure, and carbon emissions. External health expenditure in BRICS does not cause emissions, and vice-versa. VECM causal links are also discussed. The results point to the need to review health expenditure sub-policy programs to achieve zero-carbon targets.