The Impacts of Air Pollution on Health and Economy in Southeast Asia

Abstract

The accessibility of cheap fossil fuels, due to large government subsidies, promotes the accelerated gross domestic product (GDP) per capita growth in Southeast Asia. However, the ambient air pollution from fossil fuel combustion has a latent cost, which is the public health issues such as respiratory diseases, lung cancer, labor loss, and economic burden in the long-run. In Southeast Asia, lung cancer is the leading and second leading cause of cancer-related death in men, and women, respectively. This nexus study employs the panel vector error correction model (VECM) and panel generalized method of moments (GMM) using data from ten Southeast Asian countries from the period (2000–2016) to explore the possible association between emissions, lung cancer, and the economy. The results confirm that CO2 and PM2.5 are major risk factors for lung cancer in the region. Additionally, the increasing use of renewable energy and higher healthcare expenditure per capita tend to reduce the lung cancer prevalence. Governments specially in low oil price era, have to transfer subsidies from fossil fuels to renewable energy to create a healthy environment. Furthermore, cost creation for fossil fuel consumption through carbon taxation, especially in the power generation sector, is important to induce private sector investment in green energy projects.