 Rising Costs and Mass Emigration Faced with rising costs of living, food insecurity (which impacts 46% of Marshallese), economic stagnation, and rising sea levels, the Marshall Islands has experienced mass emigration. About 20% of the population has left since 2011, with up to 40% leaving certain atolls. Many Marshallese citizens want to stay, but with such low hopes for the future, that decision is increasingly harder to justify. With the economic situation unlikely to change, this wave of emigration will continue as friends and relatives follow those who have emigrated abroad, especially as diasporic links strengthen, further increasing the emigration rate. A Uniquely Trusting Solution UBIs are programs in which every resident citizen of a country receives a set amount of money at certain time intervals. UBI programs can improve mental health outcomes and working conditions, and help maintain low upfront costs. The improvement in quality of life makes UBIs enticing policy options for countries wishing to improve citizen welfare. The 2025 UBI provides that every single Marshallese resident will receive USD $800 per year in four quarterly payments. The cost of the program is high, around USD $30 million per year, but it won’t cost the Marshallese taxpayer a penny. The UBI is financed by a USD $1.3 billion trust fund already paid by the United States (with USD $500 million more promised through 2027). This fund was created to compensate the Marshall Islands for US military access and bases, as well as for decades of US nuclear testing in the region. This alone could sustain the UBI for the 20 years that the government expects it to last and potentially beyond. This is critical for the Marshall Islands, given its small national budget of USD $386 million. Without the US trust fund, it would be near-impossible for the Marshall Islands to implement any UBI without a major tax hike or government debt. The novel part of the Marshall Islands’ UBI is that people can opt to have their payments made in a cryptocurrency called USDM1, which is pegged to the US dollar via US Treasury bonds. The rationale for using USDM1 is that many atolls in the Marshall Islands lack banks. Therefore, receiving checks can take weeks, complicating the distribution of the UBI to all Marshallese. USDM1 minimizes this problem by allowing instantaneous digital transfers that overcome barriers of time and space. Although only 12 people have currently signed up for USDM1, more people are expected to move away from traditional cash transfers to cryptocurrency over time. Killing Several Birds with One Stone The first benefit of UBIs is mental health and well-being. Programs like UBIs tend to correlate with an increase in mental health, including improved perceptions of the quality of life. These improved perceptions also make it less likely for people to emigrate as their prospects in the Marshall Islands improve. The effects of the UBI on public morale have already been seen in the Marshall Islands and have provided many in the country with a much-needed spark of joy. The second major benefit of UBIs comes in its positive impact on work conditions. When UBIs are implemented, tests have shown that UBIs don’t cause significant declines in paid work participation, and any minor declines are usually due to increases in secondary education or other net-societal benefits. Furthermore, UBIs strengthen workers’ bargaining positions by giving them a fallback option. This leads to improvements in working conditions and higher wages. The universal nature of UBIs also means that, unlike household-based distributions, they don’t reinforce gender stereotypes around work and can allow more women to enter the formal workplace, improving standards of living by addressing the root economic issues of the Marshall Islands. This would overall boost the Marshallese economy and help retain the current population. The uniqueness of the Marshall Islands’ UBI provides it with many advantages that other UBIs don’t have. Studies have shown that UBIs are only viable if they are stable and don’t come at the expense of tax hikes or reduced welfare. As previously mentioned, the Marshall Islands’ 20-year UBI is financed by a trust fund paid for by the United States, which means that the fund isn’t coming at the cost of other social programs or an increase in taxes. Additionally, this does not increase government spending, which would, in turn, exacerbate inflation. The use of the trust fund for financing also gives the Marshall Islands flexibility to adjust UBI rates if needed. By financing the system externally, there are few costs and many benefits from the Marshall Islands’ UBI. Lastly, UBIs, unlike targeted approaches, don’t have to worry as much about fraud or corruption due to their universal nature. Since there is no need to vet beneficiaries, this leads to relatively low upfront costs. There’s No Such Thing as a Free Lunch Despite their benefits, UBIs are prone to criticism. In most cases, UBIs are generally viewed as a weaker tool compared to more targeted approaches for alleviating poverty. Usually, more people who aren’t in poverty will receive funds compared to those who are, which mitigates the overall impact of the program. However, whether this applies to the Marshall Islands is debatable due to the nation's high levels of food insecurity and unemployment. Arguing for a targeted approach, some Marshallese politicians have criticized the unconditional nature of the UBI and feel that it should only be given to people in need or those who meet certain requirements to alleviate long-term causes of poverty, like the lack of primary education. The second main criticism of UBIs concerns their long-term opportunity costs. While some studies have acknowledged the short-term benefits of the Marshallese UBI, they feel that it limits the Marshall Islands' long-term growth potential. In particular, people may not want to give up UBI, even if its initial goals are achieved. Continued investment in UBIs could divert vital resources from infrastructure, schools, and other long-term investments. In short, the UBI may seem successful today, but it may exacerbate the issues that contribute to emigration and poverty in the future. The IMF has also strongly criticized the Marshall Islands’ UBI as an inefficient use of resources. They have suggested eliminating the UBI within the year and say that they “stand ready” to help authorities do so. Particularly, they criticize the UBI for diverting investments away from needed developmental needs, potentially dampening the labor supply, creating operational and fiscal risks from the stablecoin option, and limiting the consumption of indigenous goods. Taken together, these effects suggest that UBI could hinder long-term economic growth by increasing the costs of living and diverting resources from necessary capital investments. Another major concern is funding stability. As previously mentioned, the UBI is financed by a trust fund paid for by the US, but the amount of funds is subject to an agreement and amendment process under the Compact of Free Association signed between the Marshall Islands and the US. Although the two countries are generally on good terms, that cannot be guaranteed in perpetuity, making financing less stable than it appears. Lately, a major concern is inflation. The UBI is injecting new money into the economy to increase consumer spending. Although depreciation won’t occur due to the Marshall Islands using the US dollar, the increased consumer spending will lead to greater demand. This could fuel the inflation that caused the food crisis and further increase emigration, forcing the government to either increase UBI payments (which would increase inflation) or scrap the UBI altogether. Alternatives Approaches, Alternative Results It is hard to dispute that many Marshallese people are in need of aid, but some suggest a targeted approach is preferable to a UBI. Several types of targeting will be explored: household-based, community-based, workfare programs, and conditional transfers. Household-based targeting is the most common type of targeting and is what most social programs, like SNAP, use. There are several compelling cases for household-targeted approaches: they use resources more effectively to help those in need, they are better at alleviating poverty, and they tend to perform better in comparative analyses. However, this comes with costs, including lower base political support, error-prone eligibility cutoffs, administrative opaqueness that can permit corruption, and more. Community-based targeting is when a fixed number of slots in the program is allocated to each community (like 5 per town). The community can then prioritize based on need. This tends to be more effective and more popular than household-targeting. However, it doesn’t account for differences in poverty between places and relies on the kindness and decision-making capabilities of ordinary people. Oftentimes, many eligible people won’t apply for targeted programs based on perceived stigma or ignorance. Workfare programs, like the NREGA in India, provide automatic work over a set timeframe to anyone who applies and meets a few, usually non-financial, criteria. This reduces stigma and boosts the economy with new jobs, but the work is physically demanding, and it either doesn’t consider need and runs into issues with cutoffs. Lastly, conditional transfers are similar to household-based targeting, but they are contingent on certain non-financial requirements being met (such as children being immunized). These have the advantages of incentivizing certain behaviors that can improve long-term welfare. However, they also tend to exclude more of those in need, particularly the most vulnerable. Walking the Tightrope Many of these alternate schemes are unlikely to work for the Marshall Islands. Conditional transfers would likely be inferior to a UBI due to the relatively high administration costs versus the amount of savings it would provide. Workfare programs will likely be too difficult due to the dispersed geography of the Marshall Islands and pre-existing issues around job creation. Community-based transfers don’t account for discrepancies between places and would likely not stem emigration in some areas. This leaves two options: the UBI or a household-based targeted approach. It is here where one crucial issue emerges. So many Marshallese need aid that a UBI has a higher net benefit than a targeted approach. However, a UBI poses the risk of injecting too much money into the economy, increasing the inflation that caused the food crisis to begin with. Therefore, the Marshall Islands need to walk a fine line. The Marshall Islands should, for the moment, continue with their current UBI. The mental health benefits it provides will address short-term needs around food security and stem emigration. However, it should not continue the UBI in perpetuity and make that clear to the public. Rather, it should slowly transition to a targeted approach and redirect funds towards job creation, environmental adaptation, and other economic measures as short-term concerns begin to abate. Lastly, the stablecoin option should be removed as its potential risks and costs are too high for its low usage. Conclusion The Marshall Islands are in a unique position. They can create a UBI without raising taxes and have a chance to dramatically improve their citizens' lives, especially in the short term. However, a UBI is unlikely to address the root economic and environmental issues that are driving the dual inflation and emigration crises impacting the Marshall Islands. Yet, a targeted approach may not be comparatively better, particularly in the near future. The Marshallese government must remain flexible in its strategy as it adjusts to ever-shifting conditions for the long-term well-being of its people and of the state. Henry Dirckx is a second-year undergraduate at the University of Washington studying environmental science. He is the Director of Human Rights and Development at the Rainier Institute.
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