Effects of Air Pollution on Public and Private Health Expenditures in Iran: A Time Series Study (1972-2014)

OBJECTIVES: Environmental pollution is a negative consequence of the development process, and many countries are grappling with this phenomenon. As a developing country, Iran is not exempt from this rule, and Iran pays huge expenditures for the consequences of pollution. The aim of this study was to analyze the long- and short-run impact of air pollution, along with other health indicators, on private and public health expenditures. METHODS: This study was an applied and developmental study. Autoregressive distributed lag estimating models were used for the period of 1972 to 2014. In order to determine the co-integration between health expenditures and the infant mortality rate, fertility rate, per capita income, and pollution, we used the Wald test in Microfit version 4.1. We then used Eviews version 8 to evaluate the stationarity of the variables and to estimate the long- and short-run relationships. RESULTS: Long-run air pollution had a positive and significant effect on health expenditures, so that a 1.00% increase in the index of carbon dioxide led to an increase of 3.32% and 1.16% in public and private health expenditures, respectively. Air pollution also had a greater impact on health expenditures in the long term than in the short term. CONCLUSIONS: The findings of this study indicate that among the factors affecting health expenditures, environmental quality and contaminants played the most important role. Therefore, in order to reduce the financial burden of health expenditures in Iran, it is essential to reduce air pollution by enacting and implementing laws that protect the environment.