Since 2011, ILRI and its partners in the public, private and non-profit sectors have pursued a comprehensive research agenda aimed at designing, developing and implementing market mediated index-based insurance to protect livestock keepers from drought related asset losses, particularly those in the drought prone Arid and Semi-Arid Lands (ASALs).
A new research brief by ILRI shares lessons in extension and outreach from the Index-Based Livestock Insurance (IBLI) project in Wajir, Kenya.
An Australian Aid-funded project seeks to generate a number of policy-relevant results on the feedbacks between migrant pastoralism and the environment, including addressing the impacts of new index insurance products.
In an article published on 2 March 2015 in Reactions magazine online, Victoria Beckett reports that ‘[r]ecent technology has allowed satellite imagery to assess weather damage’ and [o]ver the last few years “index-based livestock insurance (IBLI)” has provided insured pastoralists across Africa with a pay-out in times of drought, based on predicted rather than actual livestock deaths.’
Recently, there has been much excitement around the use of index-based insurance as an alternative to conventional insurance products that may extend the rural poor’s access to formal insurance coverage in developing countries.
Migrant pastoralists on the arid and semi-arid lands (ASAL) of East Africa are among the poorest and most vulnerable people on earth. Most of their economic activity is based around livestock herding and management.
Uninsured risk exposure and the experience of uninsured shocks in low-income rural communities cause serious welfare losses and distort behaviors, potentially even resulting in poverty traps. However, conventional insurance products are routinely unavailable due to moral hazard and adverse selection problems, as well as high transaction costs in infrastructure-poor areas.
The new study, carried out by the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and the International Center for Climate and Society (IRI) at Columbia University showcases projects that have overcome many of the challenges that have previously hindered the uptake of index-based insurance.