1 / 15

Protecting Pastoralists from the Risk of Drought Related Livestock Mortality:

Protecting Pastoralists from the Risk of Drought Related Livestock Mortality: Piloting Index-Based Livestock Insurance (IBLI) in Northern Kenya WANDERA BRENDA International Livestock Research Institute (ILRI) www.ilri.org/ibli ISAC workshop on 5th May 2011 in Addis Ababa, Ethiopia.

nitara
Download Presentation

Protecting Pastoralists from the Risk of Drought Related Livestock Mortality:

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Protecting Pastoralists from the Risk of Drought Related Livestock Mortality: Piloting Index-Based Livestock Insurance (IBLI) in Northern Kenya WANDERA BRENDA International Livestock Research Institute (ILRI) www.ilri.org/ibli ISACworkshop on 5th May 2011 in Addis Ababa, Ethiopia

  2. Managing Risk in the ASALs Arid and Semi-Arid Lands (ASAL) residents, particularly in Northern Kenya, confront harsh and volatile environments. High level of risk: Droughts, Diseases, Conflict Low levels of capacity: Infrastructure deficient Few alternative livelihood opportunities Livelihoods are primarily based on livestock

  3. Impact of Drought on Livelihoods • Livestock is both the principal asset and source of income for the vast majority of ASAL residents • Drought is the single greatest cause of livestock mortality • Most drought related livestock mortality occurs under severe conditions Proportion of total income by source Livestock mortality by cause

  4. Insurance and Agricultural Development • Risk and shock of livestock mortality due to drought imposes considerable economic and welfare costs on pastoralists • Sustainable insurance can mitigate this risk and shock • But can insurance be sustainably offered in the ASALs? • Conventional insurance cannot be sustainable, especially in remote pastoral area such as Marsabit and Northern Kenya • Transactions costs • Moral hazard/adverse selection

  5. Index Based Insurance • New innovation in insurance avoids problems that make traditional insurance unprofitable for small and remote clients: • Policy holders paid based on external “index” that triggers indemnity payouts to all insured clients • Suited for risks affecting a large number of people simultaneously and for which a suitable index exists. • Advantages • No transactions costs of measuring individual losses • no moral hazard as no single individual can influence index. • Adverse selection does not matter as payouts do not depend on the riskiness of those who buy the insurance • Disadvantage • Problem of “basis” risk (gap between each individual’s actual loss and the index)

  6. The index DESIGNING AN INDEX • Need to model a relationship between the risk to be insured and the index  The Response Function • Need for a measure that is: • Highly correlated with livestock mortality • Reliably and cheaply available for wide range of locations • Historically available • The challenge of data availability

  7. Data Deviation of NDVI from long-term average February 2009, Dekad 3 NDVI February 2009, Dekad 3 Laisamis Cluster, zndvi (1982-2008) Historical droughts NASA NDVI Image Produced By: USGS-EROS Data Center. Source: Famine Early Warning System Network (FEWS-NET)

  8. Geographic Clusters • Estimate separate response functions for distinct geographic clusters due to differences in herd composition, grazing ranges, water access, etc. • Upper Marsabit (Chalbi) • Lower Marsabit(Laisamis)

  9. Temporal structure of IBLI contract and cumulative standardized NDVI Product Design

  10. Performance of Predicted Livestock Mortality Index

  11. Challenges in using NDVI • AVHRR NDVI processing- had to test various alternatives mid stream. Consulted VITO. Eventually chose MODIS over AVHRR. • None of the project team members are RS experts. It is likely not maximize on capabilities for predictive modeling • We may improve by removing various errors in our signal (reflectance, cloud cover etc) to enhance current forage signal with a combination of relevant RS variables. • Need to identify an independent institution with the capacity to verify the index, certify and possibly announce on behalf of the market

  12. Thank you. For more information, please visit www.ilri.org/ibli

  13. From NDVI to index update and announcement • Download new MODIS NDVI every 16-days • Calculate update or final value of predicted livestock mortality index • Send results to implementation partners to disseminate information to pastoralists

  14. Contract Premiums • Premiums for contract with trigger level 15%, providing annual coverage with two potential payout periods • 5.5% in Upper Marsabit • 3.25% in Lower Marsabit • 1 Tropical Livestock Unit (TLU) = 1 cattle = 0.7 camel = 10 goats/sheep values at Ksh 15,000 • To insure 1 TLU for a year costs • 825 Ksh in Upper Marsabit • 487.5 Ksh in Lower Marsabit

  15. Contract Sales Jan/Feb 2010 • Large number of uptake • On average, small herd size (TLU) insured • Small size as business, need to grow • Lack of understanding or misunderstanding of the product

More Related