Environmental regulations, fiscal decentralization, and health outcomes

Abstract

A complete understanding of the interplay between environmental regulations and fiscal decentralization for the realization of health outcomes is crucial for policy formulation and decision-making. The aim of the study is to investigate both policy variables’ separate and combined impacts using data on four BRICS economies from 2000 to 2020. The study has employed the novel method of moments quantile regression to quantify the effect. The findings of the study show (i) a significant impact of regulations on health outcomes in higher quantiles. Environmental regulations have a strong positive impact on all three-health proxies, that is, health expenditures, life expectancy, and the number of infant deaths. Total revenue and expenditure decentralization affect health outcomes positively, while tax revenue decentralization negatively impacts them, with the effect being stronger in the lower quantiles; (ii) the combined impact of decentralization and environmental regulations turned out to be negative and significant in our study; and (iii) all variables have unidirectional causality. However, with tax revenue decentralization, health expenditures, life expectancy, and infant deaths have bidirectional causality. This finding has a strong policy implication for the policymakers. Although both policies positively impact health indicators, their interaction leads to deteriorating health outcomes. From a policy point of view, it is suggested to strike a balance between regulations and fiscal decentralization to realize the full potential of this policy mix to get better health outcomes. This study adds to previous research by incorporating the interconnected impact of environmental regulations and fiscal decentralization on health outcomes in BRICS economies.