Identifying the Spatial Spillover Effects of Renewable Energy Consumption and Industrialization on Health Costs in Iranian Provinces

Abstract

Background: Investigating the factors affecting health costs in provinces can provide planning opportunities for health economics policymakers. The aim of this study was to identify the direct and indirect effects (spatial spillovers) of factors affecting health costs in Iranian provinces, including the variables of industrialization (value added in the industrial sector), renewable energy consumption, fossil fuels, carbon dioxide emissions and urbanization rate.

Methods: This was a descriptive-analytical study, based on secondary data analysis and spatial econometric modeling, which investigated the determinants of health expenditures in Iran’s 31 provinces over the period 2011–2023. First, the required data were collected and processed from reliable library sources, Ministry of Energy and the hydrocarbon balance sheets of the Ministry of Petroleum, as well as reports and statistical yearbooks published by the Statistical Center of Iran and the Central Bank. Then, using spatial econometric models, the direct and indirect effects (spatial spillovers) of the factors affecting provincial health expenditures were examined and analyzed.

Results: The findings of this study indicate that the process of industrialization (industrial value-added), the consumption of non-renewable energy, and the level of carbon dioxide emissions exert a positive and significant impact on both provincial healthcare costs (direct effect) and healthcare costs in neighboring provinces (spatial spillover effect). Conversely, renewable energy consumption exhibits a significant negative effect on healthcare costs; specifically, an increase in the consumption of these energy sources leads to a reduction in healthcare expenditures within the province as well as in adjacent provinces through spatial spillovers. It is noteworthy that, in this model, the effect of the urbanization rate on health expenditures was found to be statistically significant at the 10 % level.

Conclusion: The results showed that industrialization, fossil fuel consumption, and urbanization significantly increase healthcare costs across the provinces through both direct effects and spatial spillover effects. The negative consequences of industrial development and the resulting pollution extend beyond the geographical boundaries of the provinces where they originate. Therefore, it is recommended that along the path of industrial development and economic expansion, by utilizing existing potentials and providing active incentives to economic actors to replace non‑renewable energies with clean sources (such as hydro, wind, and solar energy), healthcare costs be reduced at the national level.