This study develops an index-based livestock insurance (IBLI) product for managing key livestock asset risks of pastoralists in the arid and semi-arid lands of northern Kenya, where insurance markets are effectively absent and uninsured risk exposure is a main cause of persistent poverty.

The pastoral areas of Ethiopia are witnessing radical change in terms of both increasingly restricted mobility and access to vital resources. A cause and consequence of such constraints has been a move toward sedentarised forms of livestock and agricultural production. This is occurring in a political and socioeconomic vacuum, in which the customary institutions responsible for resource allocation and access to land are becoming weaker, and where the Ethiopian government has yet to develop a clear policy or strategy for resource distribution and tenure security in pastoral areas.

Livestock production in arid and semi-arid rangelands is a risky enterprise. Covariate risk of catastrophic livestock loss due to drought is the most critical uninsured risk facing livestock producers. These losses can lead to persistent poverty. We are trying to design an index based livestock insurance (IBLI) program as a viable means to help pastoralists in northern Kenya manage such covariate risk of livestock losses due to drought.

Extensive grazing is the predominant form of land use on at least a quarter of the world’s land surface, in which livestock are raised on food that comes mainly from rangelands. The term livestock includes both domesticated animals such as cattle, sheep, goats, camels, horses, llamas and alpacas, and a broad range of wild animals kept for meat or game viewing. It is estimated that tropical grasslands alone cover 18 million square kilometres, where the natural vegetation is used by mobile animals requiring forage and water throughout the year.

Thousands of livestock herders across the arid North Eastern Kenya can now rest secure, thanks to a new initiative that will shield them against loss of their livestock to drought. For the first time ever, a livestock insurance scheme has been introduced which will make use of satellite images to detect areas that could suffer from livestock loss.

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