Index Based Livestock Insurance (IBLI) for nomadic pastoralists in northern Kenya and southern EthiopiaKenya and Ethiopia

Background

The arid and semi-arid lands of northern Kenya and southern Ethiopia are regularly hit by regional droughts. These can have particularly severe impacts on pastoralist households who have almost non-existent communication and transport options and who depend on livestock for food, income, and as their main form of savings.

These challenges led the IBLI team to use the Normalized Difference Vegetation Index (NDVI) collected by satellites to develop an innovative new insurance scheme. NDVI was found to have a high correlation with forage availability in the project area (Wandera and Mude 2013). 1 Since the livestock in East African pastoral systems depend almost entirely on forage for their nutrition, NDVI serves as an indicator of the vegetation available in the area and is thus linked to livestock mortality.

In Kenya, an index was calibrated using data on livestock mortality, collected monthly since 2000. The index was then based on the relationship between predicted livestock mortality and forage availability. Due to a lack of livestock data in Borana, Ethiopia, the index triggers a payout when cumulative deviation of NDVI falls below the 15th percentile of historical vegetation growth in a given season. The programme was launched in Marsabit in northern Kenya in January 2010 and now reaches three regions in northern Kenya (Marsabit, Isiolo and Wajir), plus the Borana region of southern Ethiopia.

Relationship to CSA

IBLI greatly enhances the resilience of pastoralists due a reduction in the short term risk of asset loss or sale resulting from seasonal droughts in the arid and semi-arid lands of Kenya and Ethiopia. In the longer term, climate change projections point to greater climate variability in East Africa leading to more than one drought every five years, thus increasing the relevance of IBLI in the future.

Impact and lessons learned

IBLI has already reached more than 4,000 pastoralists. Evaluation by Janzen and Carter (2013) 2 found strong evidence that IBLI provides substantial and immediate development benefits in the event of a payout, as participating households are less likely to sell livestock, more likely to buy livestock from others, and more likely to become self-reliant for food consumption.

Links

CCAFS Big Facts - Index-based livestock insurance to increase climate resilience of pastoralists in Kenya and Ethiopia: https://ccafs.cgiar.org/bigfacts/#theme=evidence-of-success&subtheme=services&casestudy=servicesCs2

References

  • 1

    Wandera B, Mude A. 2013. Index Based Livestock Insurance (IBLI) in Northern Kenya, the product, its impact and the way forward. Nairobi, Kenya: International Livestock Research Institute.

    http://ilri-events.wikispaces.com/file/view/Index+Based+Livestock+Insurance+in+Northern+Kenya+Experience+and+way+forward.pdf This document provides information on index based livestock insurance in Northern Kenya. The document explains how this particular insurance product functions, and goes into detail into the specific case study with an overview of impacts as well as the challenges faced in the process.
  • 2

    Janzen S, Carter M. 2013. The impact of micro-insurance on asset accumulation and human capital investments: evidence from a drought in Kenya. Research Paper no. 31. Geneva, Switzerland: International Labour Organization.

    http://www.ilo.org/public/english/employment/mifacility/download/repaper31.pdf When natural disasters strike in developing countries, households are often forced to choose between preserving assets or destabilizing consumption: either can result in permanent consequences. In this paper we ask: can insurance transfer risk in a way that reduces the need for households to rely on costly coping strategies that undermine their future productivity? Since 2010, pastoralists in northern Kenya have had access to a novel index-based drought insurance product. We take advantage of an insurance payout induced by a drought in 2011 to analyze the immediate impacts of this microinsurance pilot on expected asset accumulation and human capital investments. Our results show that insured households are on average 22-36 percentage points less likely to anticipate drawing down assets, improving their ability to recover after the drought. This effect is larger for livestock-rich households who are most likely to compromise assets in response to a negative shock. We also show that insured households are on average 27-36 percentage points less likely to anticipate reducing meals than their uninsured counterpart. This second impact is stronger for livestock-poor households who are most likely to destabilize consumption. By improving food security during a drought, we also find that insured households are less dependent on food aid and other forms of assistance

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The basics

Climate-smart agriculture (CSA) is an integrative approach to address these interlinked challenges of food security and climate change, that explicitly aims for three objectives:

A. Sustainably increasing agricultural productivity, to support equitable increases in farm incomes, food security and development;

B. Adapting and building resilience of agricultural and food security systems to climate change at multiple levels; and

C. Reducing greenhouse gas emissions from agriculture (including crops, livestock and fisheries).

Entry points

Agriculture affects and is affected by climate change in a wide range of ways and there are numerous entry points for initiating CSA programmes or enhancing existing activities. Productivity, mitigation and adaptation actions can take place at different technological, organizational, institutional and political levels. To help you navigate these myriad entry points we have grouped them under three Thematic Areas: (i) CSA practices, (ii) CSA systems approaches, and (iii) Enabling environments for CSA. Each entry point is then described and analysed in terms of productivity, adoption and mitigation potential and is illustrated with cases studies, references and internet links for further information.

Develop a CSA plan

Planning for, implementing and monitoring CSA projects and programmes evolves around issues of understanding the context including identification of major problems/barriers and opportunities related to the focus of the programme; developing and prioritizing solutions and designing plans; implementation; and monitoring and evaluation. Most major development agencies have their own framework for project and programme formulation and management but CCAFS has developed a specific approach for planning, implementing and assessing CSA projects and programme called CSA plan. CSA plan was developed to provide a guide for operationalizing CSA planning, implementation and monitoring at scale. CSA plan consist of four major components: (1) Situation analysis; (2) Targeting and prioritizing; (3) Program support; and (4) Monitoring. evaluation and learning.

Finance

To meet the objectives of CSA, such as agricultural development, food security and climate change adaptation and mitigation, a number of potential funding sources are available. For instance, climate finance sources may be used to leverage agriculture finance and mainstream climate change into agricultural investments. This section offers an overview of potential sources of funding for activities in climate-smart agriculture (CSA) at national, regional and international levels and for a number of different potential ‘clients’ including governments, civil society, development organizations and others. Additionally, it includes options to search among a range of funding opportunities according to CSA focus area, sector and financing instrument.

Resource library

CSA Guide provides a short and concise introduction and overview of the multifaceted aspects of climate-smart agriculture. At the same time it offers links to references and key resources that allows for further investigations and understanding of specific topics of interest. In the resource library we have gathered all the references, key resources, terms and questions in one place for a quick overview and easy access that can be used as a part of or independently of the other sections of the website. The resource library is divided into six sections; (1) References – list all publications, links and blogs referred to on the website; (2) Tools – list all the CSA tools presented on the website; (3) Key terms – explains the most important and frequently used terms related to CSA; (4) Frequently asked questions (FAQ) – provides a rapid overview of the most common questions asked on climate-smart agriculture; (5) About – where you can find out more about the purpose and structure of, as well as on the organizations and authors behind the website; (6) Contact.

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