Climate Change and the Case for Universal Basic Income

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Last modified 01 August 2022
Categories: AIB Review
Climate Change and the Case for Universal Basic Income

By Dr Vishal Rana, Lecturer, Australian Institute of Business.

The Earth’s climate has changed throughout history. While previous climate changes have mostly been attributed to very small variations in Earth’s orbit that change the amount of solar energy our planet receives, the current warming trend is of much more significance as most of it is extremely likely to be the result of human activity since the mid-20th century. Due to this rapid change in climate, the United Nations in its seventeen sustainable development goals (SDGs) has included climate action as one of those goals. The Paris agreement in 2015 aimed to strengthen the ability of countries to deal with the impacts of climate change through appropriate financial flows, a new technology framework and an enhanced capacity-building framework.

One of the ways to tackle climate change that has gained popularity in recent years is the idea of a Universal Basic Income (UBI). UBI is a payment made to all adult individuals that allows people to meet their basic needs. It is made without any work or activity tests. The argument in favour of UBI was made as a result of concerns about technological changes in recent times. Some argue that new technology will permanently reduce the demand for labour leading to job losses, stagnant incomes and worsening inequality. The argument for UBI has become stronger since governments around the world have announced massive fiscal stimulus (e.g., job seeker, job keeper) due to COVID-19. In the past 40 years countries, like Finland, The Netherlands, Iran, Kenya, Namibia, India, and China have all trialled UBI under various schemes, not necessarily calling the trials as UBI trials but just basic income. Some trials showed that with UBI, educational attainment is higher, healthcare costs go down, entrepreneurship levels go up, as does self-reported happiness.

However, there are naysayers who point out that UBI won’t work because the cost of a sufficient UBI scheme would be extremely high. In recent research conducted by the International Labour Office, the average cost of UBI is most likely to be 20-30% of GDP in most countries. The research further suggested that while the costs can be reduced by paying smaller amounts to fewer individuals, there was no evidence to suggest that a partial or conditional UBI could do much to reverse current trends towards worsening poverty, inequality and labour insecurity (see here).

However, there is another avenue of research emerging on the impact of UBI on climate change which is still in its infancy.

When we look at UBI from a climate change perspective, some experts say, UBI could help people purchase longer-lasting and eco-friendly goods, including sustainably produced foods, that are now financially out of reach. As the population of the planet is predicted to reach somewhere around 10 billion by 2050,  sustaining that number of people without creating climate destruction seems unlikely. In a recent report, Professor Mark Maslin from University College London along with his colleagues highlighted that “enough concrete has been produced to cover the entire surface of the Earth in a layer two millimetres thick. Enough plastic has been manufactured to Clingfilm it as well. We produce 4.8 billion tonnes of our top five crops, plus 4.8 billion head of livestock, annually. There are 1.2 billion motor vehicles, two billion personal computers, and more mobile phones than the 7.5 billion people on Earth. And if you weighed all the land mammals on Earth, 30% of that weight is humans, 67% is the farm animals that feed us and just 3% is wild mammals. A sixth mass extinction looms” (read here).

In order for the Earth to be able to sustain this many people, renewable energy is extremely important.  As we need to transition away from fossil fuels, UBI could guarantee millions of workers working in the fossil field industry worldwide enough income to choose to work elsewhere. Basically, UBI could free people from undesirable jobs in polluting industries or ones that involve long, smog-inducing car commutes. The need for most of us to work harder and become more productive is compensated by enabling us to increase our consumption. If we can break the link between work and consumption, there is a huge possibility that we can lessen our environmental impact.

The implementation of UBI may well take some time, as the introduction of UBI is likely to be contested by many powerful industries around the world, which also happen to be strong lobbyists on governments. While there are arguments on both sides, one thing is certain: The idea of UBI has only gained more traction in recent times due to the COVID-19 pay stimulus by governments around the world. Andrew Yang’s 2020 US presidential campaign was built around UBI. If UBI is not yet an idea that has arrived, climate change might make all the difference.


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