About 650 herders in the vast arid area of Marsabit in northern Kenya last week received the first insurance payouts from an unusual project designed to cushion the impact of drought on pastoralists.
Payouts have averaged 3,000 Kenyan shillings (£18), with a maximum of 37,000 Ksh. Developed by the International Livestock Research Institute (ILRI) in Nairobi and US universities – and backed by USAid, the Department for International Development and the World Bank – the scheme was launched last year in Marsabit, where pastoralists keep 86,000 cattle and 2m goats and sheep. The livestock generate millions of dollars in milk and other products, and serve as the main source of sustenance and income. But ILRI estimates that up to one-third of all livestock in the region have perished during the current drought, which has left 12 million people in need of help.
In east Africa, an estimated 70 million people live in the drylands, many of them herders. In Kenya, the pastoral livestock sector is estimated to be worth $800m, while regional authorities estimate that more than 90% of the meat consumed in east Africa comes from pastoral herds.
Under the scheme, payouts are triggered when satellite images show that grazing lands in the region have deteriorated to the point where herders are expected to lose more than 15% of their herd (with the 15% threshold acting as a sort of deductible). Using satellites to track forage cover – rather than the number of dead animals – circumvents claims being made for animals that have died of disease or neglect rather than drought. Previously, insuring livestock for pastoralists has proved near impossible due to the difficulty of verifying the death of animals over a wide and remote area.
So far, the livestock mortality index at the heart of the programme appears to be working. The fatality rate predicted by the satellite assessments of forage loss chimes very closely with surveys of animal deaths on the ground.
To build the insurance model, ILRI researchers used the Normalised Difference Vegetation Index, a global database updated by Nasa, and the US National Oceanic and Atmospheric Administration to collect satellite images of plant growth in Marsabit since 1981. The information was combined with data on livestock deaths in Marsabit since 2000 to produce a programme that could reliably predict when a reduction in grazing will lead to animal deaths.
So, for example, a cattle herder in an area with a livestock mortality rate of 33% receives a payout covering 18% of his or her animals. With cattle valued at about 15,000 Ksh a head, an insurance policy covering 10 animals, or 150,000 Ksh in cattle, would pay out at about 27,000 Ksh. To date, the policies cover about 1,100 animals – mostly cattle, but also some goats and sheep, and a few camels.
There are two potential payouts each year. They are based on satellite images at the end of the long dry season in September and the short dry season in February. The payments last week – to farmers who had lost up to a third of their herds – were the first under the scheme.
Andrew Mude, the index based livestock insurance project leader at ILRI, said the 15% threshold for livestock losses was the result of discussions between ILRI researchers and two local firms, Equity Bank and UAP Insurance. A threshold below 15% would have made the premium too expensive for herders. On average, herders paid a premium of 1,150 Ksh, with a maximum of 12,000 Ksh and a minimum of 195 Ksh for the annual policy.
Mude acknowledges that insurance by itself is not sufficient, but must be accompanied by other measures such as better access to grazing lands and watering areas.
"Then the pastoralist approach, which some people dismiss as a backward lifestyle of the past, emerges as a very effective way to meet future food needs," he says.
Mude also calls the insurance scheme a work in progress; herders insisted on cash rather than livestock as payment, and the manner in which they spend it will be monitored.
"How will they use these funds?" asks Mude. "Spend on livestock, diversify or squander it?"
Mude said policy governments and donors will later have to decide whether to subsidise herders to buy insurance or stick to current schemes for helping pastoralists, which involve cash payments or food aid.
Jeremy Lind, a research fellow at the Institute of Development Studies in Sussex, says a two-track approach was needed to deal with shocks such as the drought: insurance for those with assets such as livestock, and social protection and livelihood-building programmes for the poorest groups, who lack assets.
"Where the two – social protection and insurance – might meet is in terms of more appropriate aid responses to problems of vulnerability and weakened livelihoods in pastoral areas," says Lind. "Rather than blanket food distributions following droughts [which tended to be the response to drought crises in the past], this two-track approach – providing direct support or public works payments (social protection) to the poorest, and insurance for those who have lost livestock during a drought – is a more appropriate way of responding to different types of vulnerability within pastoral societies."