The 173 Billion Dollar Question: What Israel and Palestine Could Gain From Peace

A new report by the Rand Corporation has found that both Israel and the Palestinians would gain billions of dollars if they made peace, while they will suffer even bigger losses if they continue fighting.

According to the study, released on Monday, collectively both economies would be bolstered by a whopping $173 billion by 2024 if a sustainable two-state solution to the conflict were reached imminently, but could lose up to $330 billion if violence were to break out again.

Drawing on over two years of interviews with some 200 officials, researchers estimated the net costs and benefits over the next 10 years of five alternative scenarios — a two-state solution, coordinated unilateral withdrawal, uncoordinated unilateral withdrawal, nonviolent resistance, and violent uprising — compared with the costs and benefits of "a continuing impasse."

In a peaceful two-state scenario Israel would gain over $120 billion over the next decade, equivalent to around a five percent per capita rise in income, or $2,200 per person per year, while the Palestinians would net $50 billion, equivalent to a 36 percent per capita rise in income or around $1,000 per person.

In stark contrast if a violent Palestinian uprising were to start, a 10-year projection shows it could cost Israel up to $250 billion and the Palestinians $80 billion, more than four times their GDP in 2014.

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According to the report, the costs of an Israeli withdrawal of all or some of the approximately 382,000 settlers currently living in the West Bank could be greatly reduced by coordinating with the Palestinians and seeking support from the international community, but if done unilaterally it could cost up to $20 billion.

However, at the moment it is perhaps the non-violent resistance that presents the biggest financial concern for the Israelis. Carrying an overall $80 billion price tag, this incorporates phenomena such as growth in support for the Boycott, Sanctions, and Divestment (BDS) movement and the Palestinians exerting pressure on Israel via bodies such as the International Criminal Court.

In response to what it sees as a step-up in the BDS campaign — which the report says will cost the Israeli economy $47 billion over 10 years — Israel's Prime Minister Benjamin Netanyahu said on Sunday he was launching an "offensive" against the boycott campaign.

Related: Israeli Settlements Use Palestinian Child Labor for Products Exported to US and Europe, Rights Group Says

Israel sees European Union plans to label goods that are made in Israeli settlements — such as wine, cheese, and other produce sold in supermarkets — as part of BDS, and fears further trade rules and restrictions may be imposed further down the line. It is reportedly lobbying European officials against the move via its embassies.

"A two-state solution produces by far the best economic outcomes for both Israelis and Palestinians," Charles Ries, co-leader of the study and an executive at Rand Corporation, told AP.

The study also shines the spotlight on other less discussed economic impacts of the conflict, such as its impact on tourism.

Holidaymakers to Israel generates the country an annual $6 billion yearly, but the industry is hugely affected by security issues and lost around 10 percent of its value last year due to the bloody 51-day summer war in Gaza. On the other side of the fence, Israeli restrictions on Area C in West Bank mean Palestinians are routinely losing out on a potential $900 million per year from mineral extraction near the Dead Sea and a further $125 million to $150 million in income from tourism.

Readers of the 225-page report are also able to create a whole host of potential variations on the outlined scenarios by using an online cost-of-conflict calculator that allows for the adjustment of variables including the number of settlers relocated from occupied territories, access to water, freedom of movement, and Israeli expenditure on defense, which is currently nearly double that of the US when seen a percentage of GDP.

Related: Religious War Has Moved to the Forefront of the Israel-Palestine Conflict

Follow Harriet Salem on Twitter: @HarrietSalem