A new study shows how a universal basic income could help the environment, too
The concept of a universal basic income (UBI) has gained momentum in recent years, but there are still a lot of unknowns. Some fear that giving money to low-income households might produce worse outcomes for the planet, leading to more consumption of goods and services that strain the environment. While the logic of those concerns track, a new study suggests the opposite: giving people money to address inequality might actually help protect and improve the environment.
The study, published Friday in Science Advances, looked at households in Indonesia participating in the country’s Keluarga Harapan program, or “Family Hope” program, which provides direct cash transfers to low-income households to bring them above the poverty line. After examining the habits of 266,533 households in 7,468 rural villages between 2008 and 2012, researchers found that villages participating in the cash distribution program saw a 30 percent decline in deforestation.
Indonesia presents an interesting test case for how income inequality programs affect environmental sustainability efforts. The country suffered from the third-highest rate of rain forest loss in the world in 2019, according to data from Global Forest Watch. It also has experienced an accelerating level of income inequality. According to Oxfam International, Indonesia has seen the gap between its richest and poorest citizens grow faster than any other country in Southeast Asia over the last two decades, and now has the sixth-largest wealth inequality gap in the world.
In exchange for their involvement in the Family Hope program, families agreed to participate in health and nutrition training, regular health check-ups, and education programs. Early returns suggest the program is producing positive societal outcomes. The nonprofit Borgen Project reported that Indonesia has seen a seven percent increase in antenatal care and in child immunizations in the first few years of the program. It also noted that children suffering from stunting caused by lack of nutrition has dropped by five percent. Children are also eight percent more likely to go on to secondary education and 10 percent more likely to enroll in junior secondary school.
While the program has worked to encourage better health and education opportunities for low-income households, there were concerns that the influx of cash might result in more consumption, leading to new stressors being placed on the environment. There is reason to raise such fears, as highlighted in a study published earlier this year in the American Economic Journal that found a similar cash transfer program in Mexico led to more deforestation, as households had more money to spend on goods. However, in Indonesia, the opposite happened. Typically, low-income villages and households in the country would supplement their earnings by cutting down trees and clearing out forests in order to turn it into farmland, where they plant staple crops that can help them generate more income. With the cash payments provided by the Family Hope program, that was no longer as necessary.
Reducing poverty through these types of programs aren’t guaranteed to also lessen the effects of deforestation. The vast majority of trees being cut down for farmland are cut by corporations, not individual families and villages. But the initiative does show that addressing poverty and environmental issues do not have to be at odds. In fact, there is evidence to suggest that they often operate hand in hand. Researchers have found that unequal societies often suffer from more pollution and degraded environments. According to a 2016 report published by Oxfam International, affluent countries with smaller wealth gaps see less pollution from its richest citizens and less pollution overall, with less waste and fewer carbon emissions than unequal societies.
That information is worth noting as the United States and other countries with large wealth gaps deal with the fallout from the coronavirus pandemic, which will likely only worsen income inequality. Tens of millions of Americans have been without work for weeks, if not months, with little more than a single $1,200 stimulus check and a broken unemployment system to keep them afloat. Tools like UBI might become appealing if not necessary levers needed to address income inequality. They might also have the added benefit of helping to improve the environment.