Health is Wealth: A Dynamic SUR Approach of Examining a Link Between Climate Changes and Human Health Expenditures

Health is considered as one of the critical inputs in the production function. This study is an endeavour to identify and quantify the impact of climate change measured by temperature, rainfall, and air pollution on the human healthcare expenditures for 15 countries over 2000Q1–2017Q4. Moreover, the impact of income measured by real gross domestic product (GDP) per capita and its squares, inflation, and population ageing on healthcare expenditures are also examined in the study. The empirical findings indicate that temperature and air pollution have a long-run and significantly positive relationship with healthcare costs, however, rainfall exhibits a negative relationship with the healthcare expenditures. Furthermore, all the three estimated equations exhibit an inverted U-shaped relationship between income and healthcare expenditures. The findings also show that the other two regressors, inflation and population aging, have significantly increased the cost of human health. The findings suggest that policy-makers need to focus on sustainable development, which should not be at the expense of future generations. Furthermore, improving the human health facilities needs to be a top priority. Meanwhile, health incentives and insurance should be publicised to reduce health spending.