The drylands of East Africa are home to millions of pastoralists, herders who move from place to place in search of water and pasture for their livestock. Drought years are tough for these families, who depend on their animals — cows, goats, sheep and camels — for food and income. In a drought, pasture and water become hard to find and the livestock can weaken and die.
Traditionally, pastoralists have coped with the threat of drought by keeping mobile and by sharing grazing areas. Recently, they have started replacing cows with camels and goats, which are more likely to survive as water becomes scarce.
Now, climate change is making matters worse. Seasonal rains are becoming less predictable and droughts more frequent and more severe. And with climate change, pastoralists have less time to rebuild their herds between dry spells. This leaves them vulnerable. Subsequent droughts could threaten their survival.
In 2008, the U.S. Agency for International Development (USAID) began to support programs that help East African pastoralists recover from the loss of livestock because of drought. One program developed index-based livestock insurance (IBLI), which was first sold in northern Kenya in 2010 and in southern Ethiopia in 2012.
IBLI was developed by the International Livestock Research Institute campus in Nairobi, Kenya, in collaboration with researchers from Cornell University and the University of California, Davis. The insurance has the potential to transform vulnerable pastoralists into resilient, vibrant market participants with high growth potential, USAID says.
“Without insurance, herders’ families have little protection against the hunger and poverty that can come as a result of a significant drought,” says Andrew Mude, a researcher with the International Livestock Research Institute campus in Addis Ababa, Ethiopia. “Livestock that does not perish in the drought is often sold at rock-bottom prices, just so families can survive,” he said.
The insurance program relies on NASA satellite data that shows the health of local vegetation based on ground cover. Where images show that vegetation is becoming brown, livestock are dying.
Insurance contracts are issued by local companies that often collaborate with microfinance institutions and suppliers. Pastoralists decide how many animals they want to insure. Prices are affordable but vary from place to place.
“Pastoralists who heard about the livestock insurance were keen to understand it,” said Birhanu Taddesse, Ethiopia project coordinator with the International Livestock Research Institute. Some of those who bought insurance early in the program have already experienced its benefits.
In 2011, a serious drought hit the Horn of Africa, causing devastating losses across the region. But nearly 600 pastoralists in Kenya who were insured received cash payouts.
The insurance protected this vulnerable population against negative coping strategies. “I benefited from the insurance, and that motivated me to buy it again this year,” said pastoralist Guyo Jarso Guyo.