Journal of Environmental and Natural Resource Economics

Journal of Environmental and Natural Resource Economics

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

Document Type : Research Paper

Authors
Milad Agh 1
Mohammad MirbagheriJam 2
Ali Dehghani 2
1 Economic Systems Planning Program, Economics, Industry and Management, Shahrud Industrial University, Shahrud, Iran
2 Economic Sciences, Management, Industry and Management, Shahrud Industrial University, Shahrud, Iran
10.22054/eenr.2026.92189.227
Abstract
Abstract
Introduction
Air pollution is recognized as one of the most critical environmental and economic challenges of the twenty-first century, exerting profound impacts on public health and national fiscal budgets worldwide. According to the World Health Organization (WHO), ambient air pollution accounts for approximately 7 million premature deaths annually. Primary pollutantsincluding fine particulate matter (PM2.5​ and PM10 ​), sulfur dioxide (SO2​), nitrogen oxides (NOx​), and carbon dioxide (CO2​) stem predominantly from fossil fuel combustion across industry, transportation, and power generation. Exposure to these pollutants drives acute and chronic pathologies, imposing severe financial constraints on healthcare infrastructure, particularly in developing and resource-dependent economies. While transitioning to renewable energy (solar, wind, geothermal, and biomass) is widely advocated to mitigate emissions, OPEC+ member states face structural rigidities due to deep macroeconomic reliance on hydrocarbon revenues and a minimal share of renewables in their energy matrix.
Objective
Despite growing literature on environmental health economics, empirical evidence simultaneously evaluating the dual impacts of air pollution and renewable energy adoption on healthcare expenditures within the OPEC+ bloc remains sparse. Furthermore, the literature often neglects the threshold dynamics in resource-abundant economies. This study fills this literature gap by evaluating these relationships for 23 OPEC+ countries over the period 2000–2019, incorporating both a composite Air Pollution Index (AIRP) and fine particulate matter (PM2.5).
Research Method
This study employs a panel data econometric framework (combining cross-sectional and time-series observations) covering 23 OPEC+ countries over 20 years (2000–2019). Panel econometric specifications were estimated to evaluate temporal and cross-sectional variations. The healthcare expenditure function incorporates renewable energy consumption and air pollution measures as key explanatory variables, alongside control variables including government effectiveness, population growth, public health expenditure share, and the unemployment rate to minimize omitted-variable bias
Results and Discussion
· Hypothesis 1 (Renewable Energy and Healthcare Costs): Rejection of hypothesis. Renewable energy consumption has a statistically insignificant effect on healthcare expenditures (β = -0.0022, p-value = 0.5758). This non-significance is driven by: (1) time-lagged structural benefits that extend beyond the sample horizon; (2) intervening macroeconomic and policy distortions; (3) sub-critical adoption rates of renewables in hydrocarbon-rich energy mixes; and (4) path dependencies inherent in oil-reliant economies.
· Hypothesis 2 (Air Pollution and Healthcare Costs): Confirmed. Air pollution exhibits a positive and statistically significant impact on healthcare expenditures (β≈8569.4, p-value =0.0022). Incremental increases in pollution levels directly exacerbate national health expenditures, aligning with global empirical benchmarks (e.g., Brunekreef & Holgate; Guo et al.; Liu et al.).
· Control Variables: Government effectiveness shows a significant positive impact (β=0.345, p-value =0.010), indicating higher public resource allocation to health in stronger institutional environments. Public health expenditure share demonstrates a statistically significant negative coefficient (β=−0.0098, p-value =0.0053), highlighting a substitution effect where proactive budgetary support reduces overall curative burden. Unemployment shows marginal positive significance (β=0.090, p-value =0.0557), suggesting economic hardship delays preventive care, boosting downstream acute care costs. Population growth (β=−0.047, p-value =0.285) was statistically insignificant.
Conclusion & Policy Implications
The empirical evidence indicates that air pollution acts as a major structural driver of escalating healthcare expenditures across OPEC+ nations. Conversely, renewable energy has not yet reached the critical deployment threshold required to yield statistically measurable health-cost reductions. The statistically insignificant short-term effect of clean energy does not undermine its long-term viability; rather, it underscores the non-linear nature of green transitions in resource-rich states. Alleviating health-related fiscal pressures requires sustained investment, structural energy diversification, and targeted environmental policymaking to cross the critical scale threshold in renewable generation.
Keywords
Keywords: Renewable energy
air pollution
healthcare costs
panel data regression
OPEC+
Subjects
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Journal of Environmental and Natural Resource Economics
Volume 5, Issue 13
Summer 2025
Pages 1-35

  • Receive Date 14 April 2026
  • Revise Date 17 June 2026
  • Accept Date 27 June 2026