Do renewable energy and health expenditures improve load capacity factor in the USA and Japan? A new approach to environmental issues

Abstract

This study performs the augmented autoregressive distributed lag (ARDL) approach to investigate the impact of renewable energy and health expenditures on the load capacity factor in Japan and the United States of America (USA) over the period 1982-2016. The load capacity factor is obtained by dividing the biocapacity into the ecological footprint and provides a general picture of environmental quality. Thus, the study departs from the current literature by approaching environmental problems from a broader perspective. The results of this study confirm the existence of cointegration in the USA and Japan. The long-run estimates demonstrate that renewable energy and health expenditures improve environmental quality in the USA, while renewable energy has a positive but insignificant impact on load capacity factor in Japan. It has also been determined economic growth causes significant environmental degradation, which cannot be compensated by renewables and health expenditures in both countries. According to these findings, Japanese and American governments should promote green growth, support the increase in health expenditures, and diversify renewable energy sources to reduce environmental pressure.