Options for enhancing resilience in pastoral systems

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Options for enhancing resilience in pastoral
systems
Shirley Tarawali, Andrew Mude, Jan de Leeuw, Mario
Herrero, Silvia Silvestri, Susan MacMillan
Brussels Policy Briefing no.26
New challenges and opportunities for pastoralism in ACP countries
22 February 2012
1
Key messages
 Rangelands constitute the largest land use system globally, and
pastoral communities are the environmental stewards of much of
these
 The resilience or adaptive capacity of pastoral communities, and
the natural resources on which they depend can be improved by:
– Securing assets
– Providing opportunities for diversification
 Index based livestock insurance has the potential to counteract
excessive vulnerability to drought, which will mitigate ad hoc
coping strategies.
 Some of the significant public development investment in post
hazard drought responses could go towards subsidizing
insurances to keep these affordable for the poor and to buttress
pastoral livelihoods against the effects of drought
2
Rangelands
and pastoral
communities
Tropical arid and semi-arid rangeland
based systems
population density less than 20 persons/km²
length of growing period (LGP) less than 60 days/annum
no significant crop production possible
Largest land use system on earth
35 million km2 – 24% of the total land area
Support 50% of the World’s livestock
200 million people
depend on
rangelands for
livelihoods
Half live on less
than $2/day
Vulnerability
Climate
variability
Food
insecurity
Market
shocks
Conflict
Under
investment
Poor
capacity
to cope
Future
climate
change
Disease
outbreak
Options to
improve
resilience
Increasing resilience
(adaptive capacity)
Securing
assets
Diversification
Animals
Markets
Natural
resources
Payment for
Ecosystem
Services
9
Increasing resilience
Main cause
of
vulnerability
Securing
assets
Diversification
Animals
Markets
Natural
resources
Payment for
Ecosystem
Services
10
Impact of Drought on Livelihoods
Cause of Livestock Mortality
• Drought is by far the leading cause of
livestock mortality
• Disease and Predation likely to be
directly related to drought
Component Shares of Income
• Sale of livestock and livestock
productions constitute 40% of household
income
• External support (food and cash) make
up nearly 25% of household income
Livestock Share of Productive Assets (Median 100%, Mean 49%)
Data source: Project baseline 2009 (924 Marsabit Households)
Mitigating
animal asset
loss
Index-Based Livestock Insurance (IBLI)
•
An innovative insurance scheme designed to protect pastoralists against the risk
of drought related livestock deaths
•
Based on satellite data on forage availability- NDVI , this insurance pays out
when forage scarcity is predicted to cause livestock deaths in an area.
DATA
• Livestock
Mortality
• Remotely-Sensed
vegetation index
Response
Function
Index
• Predicted
Livestock
Mortality
IBLI PILOT
•
First launched in Northern Kenya in Jan 2010. Sold commercially by local
insurance company UAP with reinsurance from Swiss Re
•
Ethiopia pilot to be launched in Aug 2012.
Lessons and Challenges from
the Pilot
 It is feasible to design index-based livestock insurance contracts
attractive to both pastoralists to individually purchase and to
commercial financial institutions that must market, sell and
underwrite the products
– Pastoralists bought the insurance
– Commercial Insurance Company, Insurance Agent and Reinsurance company
involved
 There appears to be considerable demand for IBLI
– More than 3,000 pastoralists have purchased the IBLI contract
– More than 600 of them receive indemnity payments after the drought in
October 2011
 Extension for informed decisions: Creative education tools can
help pastoralists to rapidly grasp the IBLI concept.
14
Lessons and Challenges from the Pilot
 Cost effectiveness and
density of delivery channels
is critical for success and
commercial viability.
– Successive improvements in ICT
infrastructure has been used
for product delivery - premium
collection and indemnity
payments – leading to
generalized market
development
 Private-Public Provision
– Challenges in the varied
incentives of private partners
stressing copyright and profit
and partner public institutions
(such as ILRI) interested in
identifying, testing and scaling
innovative solutions that
leverage the market to enhance
livestock related-livelihoods of
the poor
15
The Case for Public Provision
 Development agencies and governments spend a lot of resources
on drought response activities
 IBLI:
– proactive market approach to complement reactive drought expenditure
– contribute to shifting the paradigm from response to development.
– social safety net securing the productive assets of these vulnerable
populations
 ILRI has in place a rigorous impact assessment study on the social
and economic welfare impacts of IBLI that will help the efficient
targeting of public investments for livestock insurance.
 Most agricultural insurance programs receive subsidies:
– US agricultural insurance program – Farmers only pay 40%
of the actuarially fair premium.
– India, with one of the worlds largest index-insurance
programs in the world provides a 50% subsidy to farmers.
16
Key messages
 Rangelands constitute the largest land use system globally, and
pastoral communities are the environmental stewards of much of
these
 The resilience or adaptive capacity of pastoral communities, and
the natural resources on which they depend can be improved by:
– Securing assets
– Providing opportunities for diversification
 Index based livestock insurance has the potential to counteract
excessive vulnerability to drought, which will mitigate ad hoc
coping strategies.
 Some of the significant public development investment in post
hazard drought responses could go towards subsidizing
insurances to keep these affordable for the poor and to buttress
pastoral livelihoods against the effects of drought
17
Thank you
www.ilri.org/ibli
www.ilri.org
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