Universal Basic Income Could Boost Global GDP by 130%, Study Finds

A new analysis published on June 7 in the journal Cell Reports Sustainability reveals that providing a regular cash payment to the entire world population has the potential to increase global gross domestic product (GDP) by an astonishing 130%. The researchers propose that charging carbon emitters with an emission tax could help fund such a basic income program while simultaneously reducing environmental degradation.

U. Rashid Sumaila of the University of British Columbia in Vancouver, the study’s first author, has been working tirelessly to end harmful fishery subsidies worldwide. However, he has encountered resistance from people who rely on fisheries for their livelihoods, particularly those in developing countries, who argue that they need the subsidies to support their families. “One of the ways we can deal with this is to give the people basic income. With that, we could achieve sustainability goals without compromising people’s livelihoods,” Sumaila says.

The Economic Impact of Universal Basic Income

The research team’s calculations show that providing a basic income to the entire world population of 7.7 billion people would cost $41 trillion. Alternatively, targeting only the 9.9 million people living below the poverty line in less developed countries would require $442 billion. In return, the analysis suggests that giving basic income to the entire world population could boost the global GDP by an impressive $163 trillion, which is approximately 130% of the current GDP.

Sumaila explains the ripple effect of every dollar spent on implementing basic income, stating, “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.”

Funding Basic Income Through Environmental Taxes

The researchers also explored various ways to fund basic income programs. They estimated that taxing CO2 emitters alone could generate about $2.3 trillion a year, sufficient to provide a basic income for all people living below the poverty line in less developed countries. The team also suggested alternative options, such as a plastic pollution tax or redirecting harmful oil, gas, agriculture, and fisheries subsidies to finance the program. These approaches have the potential to address two of the world’s biggest challenges—reducing environmental degradation and alleviating poverty.

Real-world examples have demonstrated the benefits of basic income programs. In Indonesia, villages that received a basic income have substantially lower deforestation rates than those without it.

“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,” Sumaila says.

Sumaila also emphasizes the proactive nature of basic income programs, arguing that they can make communities more resilient when crises like pandemics or natural disasters strike. “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,” he says.

As policymakers and economists grapple with the challenges of poverty and environmental degradation, the findings of this groundbreaking study offer a compelling case for the potential of universal basic income to drive economic growth while simultaneously addressing some of the world’s most pressing issues. While the implementation of such programs may face political and logistical hurdles, the evidence presented in this research provides a strong foundation for further exploration and debate.

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