Interactive Effect of Health Expenditure and Institutional Quality on Environmental Sustainability in Nigeria.

Environmental sustainability has emerged as a pressing concern for policymakers, particularly in developing countries like Nigeria, where institutional inefficiencies and underinvestment in key sectors challenge efforts to reduce environmental degradation. Motivated by this growing concern, this study investigates the interactive effect of health expenditure (HEXP) and institutional quality proxied by government effectiveness (GEFF) on environmental sustainability in Nigeria from 2000 to 2024.Using the Autoregressive Distributed Lag (ARDL) approach, both short-run and long-run dynamics are examined. The empirical findings reveal that increased health expenditure (HEXP) significantly reduces CO₂ emissions (CO2) in both the short and long run, indicating that investments in health contribute positively to environmental sustainability. Furthermore, government effectiveness (GEFF) exerts a consistently negative and significant effect on CO2, highlighting the critical role of institutional quality in achieving environmental goals. Notably, the interaction between government effectiveness (GEFF) and health expenditure (HEXP) further amplifies the environmental benefits, suggesting that good governance enhances the effectiveness of public health spending in reducing emissions. In contrast, economic growth (GDPG) is found to have no significant impact on CO2, underscoring the limited role of growth alone in fostering environmental sustainability. Based on these findings, the study recommends strengthening institutional frameworks to support effective environmental regulation and enforcement. It also advocates for environmentally conscious health investments such as green healthcare infrastructure and pollution prevention programs as strategic tools to simultaneously improve public health and reduce environmental degradation.