Financial Repercussions of Carbon Emissions and Depletion of Natural Resources: The Role of Fiscal Policy in Determining Health Expenditures

This study examines the impacts of various environmental factors on public and private health expenditures. The significant and robust effects of carbon emissions, depletion of forest areas, depletion of natural resources, and access to clean fuel for cooking on health expenditures, communicable diseases, and average life expectancy highlight the importance of investing in improving environmental conditions. Empirical evidence shows that carbon emissions are a major contributor to the increase in public and private health expenditures. Additionally, the study reveals an interesting aspect of fiscal policy, where external outstanding debt has a significant positive effect on per capita private health expenditures but a negative effect on nationwide aggregate health expenditures. This finding underscores the need for cautious management of debt financing from external sources. The study's results suggest that governments should avoid heavy indirect taxation, while a higher proportion of direct taxes in government revenue can enhance public sector spending on health services. Furthermore, the effectiveness of government, political stability, and absence of violence in a country emerge as significant determinants of health expenditures and the spread and severity of communicable diseases. The study utilizes five equations estimated using 14 years of data from 187 countries, employing the panel least squares (PLS) technique.