The Effect of Inflation Rate on CO2 Emission: A Framework for Malaysian Construction Industry

Abstract

Inflation and CO2 emission are the two most deleterious elements in the construction industry. However, so far no linkage between the two has been estimated. Therefore, this study examines the relationship between carbon dioxide (CO2) emission and the inflation rate in the construction industry of Malaysia and proposes a CO2 emission calculator framework. As it is not possible to calculate the effect directly, therefore, an indirect assessment of the correlation coefficient was performed between the inflation rate (independent variable) and construction rates, i.e., building material prices and value of construction work (dependent variables) along with percentage deviation of each variable. The results show that with a decrease in the inflation rate, the prices of the building materials also decrease, whereas the value of the construction work increases. The relationship looks attractive from an end-user perspective, but it creates a major problem of CO2 emission. The effect impacts directly on environmental sustainability as it is not suitable for the greenhouse effect because it triggers CO2 emission. While estimating how much CO2 emission occurs from the value of construction work of Malaysia, it was revealed that there is no such calculator available to perform the estimation. Therefore, a CO2 emission calculator framework is proposed, which will be beneficial after its practical implementation for the construction industry stakeholders and government/policy makers to monitor the emissions and control the adverse effects of massive construction work.