University of California at Davis News and Information: Herdsmen in drought-stricken Kenya have received their first payments from an innovative livestock insurance program designed with the help of a Universty of California, Davis, economist. The program, intended to prevent rural livestock producers in arid east Africa from falling into indigence and food-aid dependence, could be a model for improving food security in other areas of the world.The recent drought in East Africa triggered the program's first payment of a total of $25,000 U.S. to 650 families who had purchased insurance for the current season.
“The project began with the idea that it may be cheaper for the public sector, including food-aid donors like the United States, to help people protect their livestock assets against drought at low cost through a partial insurance subsidy than it would be to let them lose their assets and resort to emergency assistance,” said UC Davis professor Michael Carter, an agricultural and resource economist. “Uninsured risk creates a poverty trap for villagers who depend on animals for income and a stable food supply. Big droughts in this area wipe out 50 to 60 percent of what people have.”
The pilot program, the first index-based livestock insurance program for African herders, was developed by researchers at UC Davis; Cornell University; and the International Livestock Research Institute, based in Nairobi, Kenya. Commerical collaborators are the Kenya-based UAP Insurance Ltd. and Equity Bank.
Index-based insurance protects against risks shared by an entire community. In this case, the index, or statistical measure of risk, is the availability of forage based on satellite imagery. When the index predicts livestock mortality in excess of 15 percent, payment is triggered to all clients within the defined geographic area....
Boran cattle on a ranch in Kapiti, Kenya, from ILRI, Wikimedia Commons via Flickr, under the Creative Commons Attribution 2.0 Generic license
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