ASYMMETRIC IMPACT OF ENVIRONMENTAL DEGRADATION ON PUBLIC HEALTH EXPENDITURE: THE CASE STUDY OF PAKISTAN

Abstract

The utilization of biofuels and the degradation of environmental quality have significant implications for the government’s healthcare system, particularly in terms of public health expenditure, as well as for the financial burden on households. Therefore, the primary objective of this study is to examine the relationship between carbon emissions and public healthcare expenditure in Pakistan over the period 1980–2020. To achieve this, the study introduces modifications to the conventional ARDL model to investigate the asymmetric relationship between environmental degradation and public health expenditure. The bounds test results confirm the presence of a long-run nonlinear association among environmental degradation, public health expenditure, trade openness, urbanization, and economic growth in Pakistan. Findings from the NARDL model reveal that positive changes in carbon dioxide emissions significantly increase public health expenditure. Specifically, an increase in carbon emissions is associated with higher public health spending, while a decrease in emissions tends to reduce it in the long run. Both positive and negative shocks in economic growth exert significant effects on health expenditure. Moreover, a positive shock in trade openness increases public health expenditure, whereas a negative shock reduces it. The Wald test results indicate the presence of asymmetric effects in both the short and long run, except for trade openness, which shows a symmetric effect in the long run. The study concludes that policymakers should account for the asymmetric impacts of environmental degradation, economic growth, and trade openness when formulating public health expenditure policies in Pakistan