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A possible joint solution for alleviating poverty and combating the climate crisis may come in the form of a universal basic income (UBI), according to a recent research study. This UBI would be subsidized through taxation on carbon emissions.
UBI, a system where every individual receives a consistent, unconditional sum of money, could overtake all other welfare systems, potentially enhancing overall happiness in society.
Conducted by researchers at the University of British Columbia in Canada, the study found that a UBI can elevate living standards and significantly increase the global gross domestic product (GDP).
Implementing UBI, however, is expensive. The researchers propose taxing the companies who contribute to pollution, as carbon emissions taxes could yield about US$2.3 trillion annually.
Societal threats like environmental deterioration and poverty could be simultaneously addressed by using the ‘polluter pays principle,’ whereby polluters would finance the cleanup efforts, notes economist Ussif Rashid Sumaila from the University of British Columbia.
In their exploration of 186 countries, Sumaila’s team combined economic models and analysis of factors like marginal propensity to consume, which judges the likelihood of people spending their disposable income.
Their study predicated that a planetary-wide UBI could cost US$41 trillion or US$442 billion to support the 9.9 million people living in poverty in developing countries. The projected upsurge in global GDP could be US$163 trillion, or 130 percent.
This means for each dollar spent on UBI, up to seven dollars could be returned through economic activity in the purchase of essentials such as food and housing.
“Our findings show a positive economic-impact-to-cost ratio for basic income implementation across all scenarios examined,” the authors state in their study.
Earlier studies have also associated UBI-like models with positive environmental outcomes. The associated environmental tax could spark adoption of greener initiatives, although a shift to other revenue sources would eventually be needed.
A UBI could also improve societal resilience to crises, offering a buffer during disasters or pandemics, potentially reducing the negative impacts.
“In short, extraordinary times call for commensurate measures,” Sumaila remarks.
Despite the prospects, the practical implementation of UBI faces political obstacles and concerns around work and innovation disincentivization, as well as funding issues.
“To lower the implementation costs, we recommend a range of strategies for basic income financing,” the researchers suggest.
“Basic income implementation is feasible and could be an effective mechanism to reduce global poverty while also decreasing environmental degradation,” they conclude.
This investigation is documented in Cell Reports Sustainability.
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FAQs about Universal Basic Income and Its Implications
- What is a universal basic income?
A universal basic income is a financial payment given to all individuals within a society on a regular basis without any conditions or means testing.
- How could a universal basic income double the world’s GDP?
According to the study, a universal basic income could increase consumer spending, thereby stimulating economic growth and potentially doubling the world’s GDP.
- How would a universal basic income be funded?
The recent study suggests that a carbon emissions tax on polluters could generate sufficient funds to support a UBI. Long-term, diversified funding strategies would be required.
- What are the potential downsides of implementing a universal basic income?
Potential downsides include the high cost of implementation, potential work disincentives, and the need for significant political cooperation and consensus.
- Has any country fully implemented a universal basic income?
As of now, no country has implemented UBI nationwide, although some countries and regions have conducted trials and pilot programs to explore its feasibility.
