Insuring against drought-related livestock mortality: Piloting index-based livestock insurance in northern Kenya

摘要

Climate related shocks are among the leading cause ofproduction and efficiency losses in smallholder crop andlivestock production in rural Africa. Consequently, theidentification of tools to help manage the risks associatedwith climactic extremities is increasingly considered to beamong the key pillars of any agenda to enhance agriculturalgrowth and welfare in rural Africa. This paper describes theapplication of a promising innovation in insurance design –index-based insurance – that seeks to bring the benefits offormal insurance to help manage the weather-related risksfaced by rural crop and livestock producers in low-incomecountries. In particular, we highlight the research anddevelopment agenda of a comprehensive effort to designcommercially viable index based livestock insurance aimed atprotecting the pastoral populations of northern Kenya from theconsiderable drought-related livestock mortality risk that theyface. Detailing the conditions that make the pastoral economyin northern Kenya an ideal candidate for the provision of indexbasedinsurance products, the paper describes the contractdesign, defines its structure, offers analysis that indicates ahigh likelihood of commercial sustainability among the targetmarket and describes the process of implementation leading upto the launch of a pilot in Marsabit District of northern Kenya inearly 2010.