The Effect of Inflation Rate on CO 2 Emission: A Framework for Malaysian Construction Industry

Muhammad Ali Musarat, Wesam Salah Alaloul, M. S. Liew, Ahsen Maqsoom and Abdul Hannan Qureshi
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Muhammad Ali Musarat: Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Malaysia
Wesam Salah Alaloul: Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Malaysia
M. S. Liew: Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Malaysia
Ahsen Maqsoom: Department of Civil Engineering, COMSATS University Islamabad Wah Campus, Wah Cantt 47040, Pakistan
Abdul Hannan Qureshi: Department of Civil and Environmental Engineering, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Tronoh 32610, Malaysia

Sustainability, 2021, vol. 13, issue 3, 1-16

Abstract: Inflation and CO 2 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 (CO 2 ) emission and the inflation rate in the construction industry of Malaysia and proposes a CO 2 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 CO 2 emission. The effect impacts directly on environmental sustainability as it is not suitable for the greenhouse effect because it triggers CO 2 emission. While estimating how much CO 2 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 CO 2 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.

Keywords: CO 2 emission; inflation rate; construction rates; building material prices; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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