Air pollution, urban environmental quality and health expenditures: evidence from industrial cities in Iran

INTRODUCTION: Rapid industrialisation and urbanisation can worsen air quality and increase the financial pressure on health systems. However, city-level evidence on how fine particulate matter (PM2.5) and urban environmental characteristics relate to healthcare expenditures remains limited in middle-income settings. METHODS: We conducted an ecological panel study of 10 industrial cities in Iran (2011-2024). We assembled city-year data on per-capita healthcare expenditures and key urban characteristics from municipal statistical yearbooks and linked them to annual PM2.5 estimates. We fitted log-log panel models with city random effects and year fixed effects using robust inference. Sensitivity analyses included leave-one-city-out re-estimation and an alternative specification replacing income with the household-income Gini coefficient. RESULTS: Per-capita healthcare expenditures were positively associated with PM2.5 (elasticity=0.37; p=0.057), per-capita income (=0.18; p=0.020), population density (=0.28; p=0.010), and the share aged ≥60 years (=1.05; p=0.008). The association for green space was small and sensitive to specification (=0.05; p=0.034 in the baseline model and not statistically significant when lagged), while per-capita healthcare facilities were not statistically significant. In the inequality model, the Gini coefficient was positively associated with healthcare expenditures (p=0.002). CONCLUSIONS: Higher ambient PM2.5, urban density, population ageing and income inequality were associated with higher healthcare expenditures in this city-level panel analysis. These findings suggest that coordinated policies combining emission control, health-system strengthening (particularly preventive and primary care), and improved quality and equitable access to urban green infrastructure may help curb growth in healthcare spending in rapidly industrialising and urbanising settings.