Health, environment, and sustainable development: evidence from panel data from ASEAN countries

The paper explores empirically the nexus of environmental quality, measured by carbon dioxide (CO2) emissions, and human-health-capital formation, using covariates: real gross domestic product (GDP) per capita, inflation, and unemployment rate. This study uses a health expenditure approach and data from a panel of seven ASEAN countries from 1995 to 2020 within the health production function framework. The method of fully modified ordinary least squares (FMOLS) is implemented to estimate the long-run parameters and the Dumitrescu-Hurlin (Econ Model 29:1450–1460, 2012) test for the direction of causality. The empirical results reveal that high CO2 emissions raise health expenditure as do inflation and unemployment rate. While rising income makes higher healthcare costs affordable, this fact might persuade policymakers to adopt measures to cut CO2 to improve human-health-capital formation and thus to support long-run sustainable economic growth through healthy human capital formation.