Examining the Impact of Air Pollution and Renewable Energies on Healthcare Costs in OPEC Plus Countries

Abstract
Introduction
Air pollution is recognized as one of the most critical environmental challenges of the twenty-first century, exerting profound impacts on public health and the economies of societies worldwide (Brunekreef & Holgate, 2002; WHO, 2024). According to the World Health Organization, air pollution is responsible for approximately 7 million premature deaths annually, making it one of the principal risk factors for human health (WHO, 2022). Particulate matter (PM2.5 and PM10), sulfur dioxide (SO₂), nitrogen oxides (NOₓ), and carbon dioxide (CO₂) are among the most significant pollutants, originating primarily from fossil fuel combustion in the industrial, transportation, and electricity generation sectors (Seinfeld & Pandis, 2016). Numerous epidemiological studies have established a direct relationship between long-term exposure to air pollutants and the incidence of respiratory diseases, cardiovascular conditions, neurological disorders, and cancers (Pope III, 2006; Ghorani-Azam et al., 2016). These health consequences impose substantial economic burdens on healthcare systems, burdens that are particularly severe in developing countries due to weak infrastructure and limited financial resources (Yadav et al., 2023). In this context, the transition toward renewable energy sources, including solar, wind, geothermal, and biomass, has been proposed as a key strategy for reducing pollutant emissions and improving public health (Apergis et al., 2018; Pablo-Romero et al., 2016). However, OPEC+ member countries, as some of the world’s largest oil producers, face unique challenges in this regard because of their structural dependence on oil revenues and the minimal share of clean energy in their energy mix (Khabiri & Tavassoli, 2022). The primary objective of this study is to quantitatively investigate the impact of air pollution and renewable energy consumption on healthcare expenditures in OPEC+ countries using panel data econometric methods. The novelty of the present research lies in two aspects: (1) its focus on the OPEC+ country group as a less-studied case, and (2) its distinction between the effects of two separate air pollution indicators, namely the composite Air Pollution Index (AIRP) and particulate matter (PM2.5).
Objective
A review of the literature indicates that few studies have simultaneously examined the effects of air pollution and renewable energy on healthcare costs in OPEC+ countries. There is also a lack of research distinguishing between the short-term and long-term effects of these variables. The present study attempts to fill this gap.
Research Method
This study is designed as a panel data analysis. In this approach, data are collected for the countries under study over a specific period, from 2000 to 2019, and the effects of the explanatory and independent variables on the dependent variable are analyzed over time. This type of design makes it possible to examine the effectiveness of variables at both the temporal and cross-sectional levels and helps clarify the relationships among the different variables.
Results and Discussion
Testing the First Hypothesis (Renewable Energy and Healthcare Costs):
The analysis shows that renewable energy consumption has no significant or robust effect on reducing healthcare costs in OPEC+ countries (coefficient: -0.0022, p-value: 0.5758). Therefore, this hypothesis is rejected. The main reasons for this lack of significance are as follows:

Time constraints: The positive effects of clean energy on health and cost reduction are long-term and were not observable within the study period (2000-2019).
Intervening factors: Air pollution, economic policies, and overall economic conditions may neutralize the effect of renewable energy.
Low share of renewable energy: In oil-rich countries, the share of renewables in the energy mix remains negligible and has not yet reached the critical threshold required to exert a measurable impact.
Oil-dependent economic structure: The absence of strong and consistent policies for the development of green energy means that short-term effects on health remain minimal.

Testing the Second Hypothesis (Air Pollution and Healthcare Costs):
Air pollution has a positive and significant effect on healthcare costs (coefficient: approximately 8569.4, p-value: 0.0022). Any increase in pollutant emissions directly raises the financial burden on the healthcare system. Therefore, reducing air pollution not only improves public health but also generates substantial economic savings. This finding is consistent with the global literature, including studies by Kreyling and Fleck, and Brunekreef and Holgate.
Other Findings of the Model (Control Variables):
Government effectiveness has a positive and significant effect on healthcare costs (coefficient: 0.345, p-value: 0.010), suggesting that more effective governments tend to allocate greater public resources to the health sector. Population growth has a negative effect (coefficient: -0.047, p-value: 0.285), possibly due to economies of scale and improved efficiency in larger populations. Public health expenditure has a negative and significant effect (coefficient: -0.0098, p-value: 0.0053), indicating a substitution effect in which an increase in the public budget share reduces total treatment costs. The unemployment rate has a positive effect with marginal significance (coefficient: 0.090, p-value: 0.0557), suggesting that economic recession and reduced household financial capacity may delay preventive care and increase costs.
 Conclusion
This study of 23 OPEC+ countries over the period 2000-2019 shows that air pollution is a serious threat to public health and a major driver of rising healthcare costs. In contrast, although renewable energy is theoretically an effective strategy for reducing pollution, its very low share in these countries means that it has not yet had a significant short-term impact on health costs. The rejection of the first hypothesis does not imply that clean energy is ineffective in the long run. Rather, it emphasizes the need for a long-term perspective, continuous investment, and integrated policymaking to support the transition from fossil fuels to renewable sources. Reducing healthcare costs in OPEC+ countries requires reaching a critical threshold in the share of clean energy.