Does Renewable Energy Consumption Have an Effect on Health Expenditures? Example of EU Countries

Abstract

Due to the harmful effects of traditional energy sources on the environment and health, the consumption of renewable energy sources has recently come to the fore on the world agenda. In order for national economies to maintain their existence, individuals must ensure their health and welfare. In this context, the priority duty of countries should be to protect public health and ensure its sustainability. There are many factors that determine a country's level of healthcare expenditures; environmental conditions are also one of them. The increase in greenhouse gas emissions resulting from the consumption of non-renewable energy sources can pose a great danger to human welfare and the environment. Environmental problems caused by greenhouse gas emissions negatively affect human health in many ways, such as affecting the nervous system, lungs, and causing respiratory diseases. In addition, environmental pollution resulting from greenhouse gas emissions increases health expenditures and causes a decrease in labor productivity. Considering these negative effects, increasing the use of wind, solar, geothermal, and other environmentally friendly energy sources, which are renewable energy sources, will contribute to environmental improvement by meeting the energy needs of countries. Recently, the increase in the resources allocated to health expenditures from the national income of countries has made the discussion of sustainability in the relevant field a current issue. In this respect, researching the factors affecting health expenditures will provide important information to policy makers. This study examines the health expenditures of renewable energy consumption in 13 EU countries (Belgium, Czech Republic, Denmark, Germany, Austria, Spain, Sweden, Italy, Portugal, Greece, Finland, France, and the Netherlands) selected considering data availability between 2000 and 2020 investigating in which direction it affects. In the study, countries with the highest consumption of renewable energy were selected. Since the sustainability of the recently increasing health expenditures is important, the variables of renewable energy consumption and economic growth were analyzed and the subject was limited. In this context, it is believed that the findings will provide important information to policy makers. The main motivation of the study is that there are limited studies on the relevant subject in the literature and panel cointegration and panel cointegration coefficient estimator tests are not used. Obtaining renewable energy consumption and health expenditure data from 2000 to 2020 constitutes the main limitation of the study. As analysis methods, Lagrange multiplier (LM) cointegration and Common Corelated Effect (CCE) cointegration estimator tests were used. Before the application of these tests, cross-sectional dependence and homogeneity were determined. Fourier LM unit root test was used in examining the unit root process. Then, cointegration test and cointegration coefficient estimators, which is the last stage of the application, were determined. According to the panel cointegration coefficient estimation results, in the general analysis conducted for 13 EU countries, the effect of renewable energy consumption on health expenditures is statistically significant at the 10% level. Accordingly, a 1% increase in renewable energy consumption decreases health expenditures by 0.197%. In country-specific studies, the effect of renewable energy consumption on health expenditures was statistically significant and negative in Denmark, Spain, Sweden, and Greece, reducing health expenditures by 0.132%, 0.111%, 1.288%, and 0.782%, respectively. The effect of GDP on health expenditures appears to be statistically significant at the 1% level. Accordingly, a 1% increase in income increases health expenses by 1.071%. In country-based analyses, the coefficients are statistically significant and positive in Germany, Austria, Belgium, Czech Republic, France, Spain, Sweden, Italy, Portugal, and Greece. These findings indicate that the increase in environmentally friendly, reusable energy consumption will have a positive impact on the environment, reduce health expenditures and contribute positively to the sustainability of health financing. In addition, it emphasizes that increases in GDP are reflected in health expenditures, thus increasing the quality of health.