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Universal basic income can double global GDP while combatting climate change

According to a groundbreaking analysis, universal basic income could not only reduce poverty but also significantly boost the global economy.
According to a groundbreaking analysis, universal basic income could not only reduce poverty but also significantly boost the global economy. (CREDIT: Shutterstock)

Imagine a world where everyone receives a regular cash payment, enough to cover their basic needs. According to a groundbreaking analysis in the journal Cell Reports Sustainability, such a policy could not only reduce poverty but also significantly boost the global economy.


The researchers behind the study propose funding this universal basic income (UBI) through taxes on carbon emissions, which would also help combat climate change.


 
 

U. Rashid Sumaila, a researcher at the University of British Columbia, and his team suggest that integrating UBI with environmental policies could address two pressing global issues simultaneously. “We are proposing that if we can couple basic income with environmental protection, we can save two birds with one stone,” says Sumaila. This idea is not just theoretical; it comes from Sumaila’s extensive experience in advocating for sustainable practices, particularly in fisheries.



The Cost and Economic Potential of Basic Income


The team's analysis provides a detailed look at the financial aspects of implementing a UBI on a global scale. To provide a basic income to every person on Earth would cost approximately $41 trillion. This sounds astronomical, but the potential return on investment is equally staggering.


The study estimates that global GDP could rise by $163 trillion, or 130%, as a result of this policy. This is because every dollar given out as basic income has a multiplier effect throughout the economy.


 
 

“If you give someone one dollar, they will spend part of the money to buy food or pay rent. And people that are paid for the food and accommodation will use part of this for their own consumption and so on. The dollar will trickle up throughout society. Our calculations show that the economic impact of that dollar will be much greater than its original amount,” Sumaila explains.


One of the critical challenges in implementing UBI is funding it sustainably. The researchers propose several innovative solutions. A primary suggestion is to levy taxes on carbon emissions.


 

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Their calculations indicate that taxing CO2 emitters could generate about $2.3 trillion annually. This would be sufficient to provide a basic income to all people living below the poverty line in less developed countries.


Additionally, the team suggests other funding methods, such as a tax on plastic pollution or reallocating subsidies from environmentally harmful sectors like oil, gas, and agriculture. These approaches not only provide the necessary funds for UBI but also incentivize businesses and individuals to reduce their environmental footprint.


 
 

Real-World Evidence and Benefits of Basic Income


The concept of UBI isn’t just a theoretical exercise. There are real-world examples demonstrating its benefits. In Indonesia, for instance, villages that received a basic income saw significant reductions in deforestation compared to those that did not. This suggests that providing financial stability can reduce the need for environmentally harmful activities.


Economic impact of UBI-to-cost ratio by country for people living below national poverty lines.
Economic impact of UBI-to-cost ratio by country for people living below national poverty lines. (CREDIT: Cell Reports Sustainability)

Sumaila acknowledges that implementing such policies, especially carbon taxes, can be challenging. “It’s not easy to implement carbon taxes, but that doesn’t stop our academics from reporting the evidence we have. Besides, we are not taxing everyone, just those who pollute the environment. They should pay for the damage they caused,” he states.


 
 

The COVID-19 pandemic highlighted the fragility of many people's financial situations and the urgent need for government intervention. Sumaila believes that a pre-existing UBI could have mitigated much of the economic distress caused by such crises. “We saw during COVID-19, governments around the world were coming up with all sorts of programs to support people who suddenly lost their ability to earn income. If we had basic income in place, we didn’t have to scramble,” Sumaila says.


Economic impact of UBI-to-cost ratio by country for people living below national poverty lines
Economic impact of UBI-to-cost ratio by country for the entire population. (CREDIT: Cell Reports Sustainability)

The proposal to fund a global basic income through carbon taxes presents a bold vision for the future. By addressing both economic inequality and environmental degradation, this approach offers a holistic solution to some of the world’s most pressing problems. The potential to boost global prosperity while protecting the environment makes it a compelling option for policymakers worldwide.


 
 

The economic uplift and environmental benefits combined suggest that this innovative approach deserves serious consideration and further exploration.






For more science and technology stories check out our New Discoveries section at The Brighter Side of News.


 

Note: Materials provided above by The Brighter Side of News. Content may be edited for style and length.


 
 

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