Nauru’s Citizen’s Dividend

The tiny pacific island of Nauru is a cautionary tale for mineral royalties being saved in a Permanent Fund and paying out a Citizen’s Dividend. The island was covered by guano, a form of phosphate, a fertilizer. The royalties from phosphate mining resulted in Nauru having the highest per capita income in the world. The phosphate royalties were paid into the Nauru Phospate Royalties Trust. (Paradeep Phosphates was set up in 1981 as a JV between Nauru and India. The Nauru share was owned by the Trust.) A part of the income from the trust was paid out as a stipend to Nauruans. The stipend is essentially a Citizen’s Dividend, a form of Universal Basic Income.

The story ends badly. The massive fund of A$1 bn was frittered away. Nauru is bankrupt and unlivable. After being an offshore banking center, Nauru now earns its income from rent as an asylum seekers detention center for Australia. And it now faces the prospect of drowning due to rising seas.