Dynamic linkages among CO2 emissions, health expenditures, and economic growth: empirical evidence from Pakistan

The linkage between high concentration of greenhouse gases (GHGs) and climate change is well recognized as there is severe influence of climate change on public health. Carbon dioxide is most prominent GHG which deteriorates the environment and impacts human health. On the parallel, economic growth also affects health conditions sometimes positively or vice versa. The objective of this research work is to examine the dynamic linkages among CO2 emissions, health expenditures, and economic growth in the presence of gross fixed capital formation and per capita trade by using auto regressive distributive lag (ARDL) model for Pakistan covering annual data from the year 1995-2017. Our empirical results show that there is significant long run as well as short-term causal relationship between health expenditure, CO2 emissions, and economic growth in Pakistan. Bidirectional relationship of Granger causality is found between health expenditures and CO2 emissions, and further between health expenditures and economic growth. Short-run unidirectional causality is running from carbon emissions to health-related expenditures. The bidirectional causal relationship is also investigated between carbon emissions and growth as well as gross fixed capital formation and growth. Then, policy recommendations towards controlling pollution, particularly CO2 emissions and health expenditures without compromising economic growth are suggested.