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Satellite will help Kenya safeguard livelihood of pastoralists

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Satellite-based insurance for livestock has been developed in Kenya to measure the country’s “greenness,” safeguarding herders against droughts and other effects of climate change. Slated to begin in early 2010, Kenya will be the first developing nation to set up a satellite insurance mechanism.

Specialists will study satellite images measuring the greenness of vegetation in the northern Marsabit region. A shift to brown means pastoralists who rely on the land will be paid for the deaths of their livestock that are predicted to follow such a transition.

Until now, the International Livestock Research Institute (ILRI) has provided such herders with hay or animal vaccines in case of a drought but this is costly and not very efficient.. Satellite insurance means veterinarians do not need to go into the fields and certify animals have died before insurance payments can be made.

Andrew Mude, an economist and expert for ILRI and the Consultative Group on International Agricultural Research, told MediaGlobal that research showed that drought-related livestock mortality was the greatest source of vulnerability for pastoralists.

“The objective then became to identify and design a product that could help pastoralists manage drought-related livestock mortality. IBLI [index-based livestock insurance] was a natural choice that was very well-suited to managing the particular type of risk in that particular context.”

While the pilot project is targeted at individual clients, such a system could also “help nations use insurance products to ensure the rapid receipt of resources to fund relief and rehabilitation, resulted from index-able phenomenon such as severe rainfall shortage or even excess rain.” Mude noted that ranchers and farmers in Canada, the USA, and Spain have used similarly designed instruments in the past.

Presently, talks are underway with Kenyan insurer UAP, Swiss Re and Kenya’s Equity Bank on insurance details. ILRI reported, “Annual premiums were likely to be US$50 to US$100 a year for households with 6-8 cattle.”

Because satellite data is free, running costs for the system are fairly low, Mude says. The question was whether potential clients could afford to buy the product. “Our preliminary research among a sample of target clientele has shown a sufficiently high willingness-to-pay,” Mude said.

This story is adapted from a story entitled Kenya to use satellites to fight climate change by Alison Walkley, 05 November 2009 MediaGlobal Newswire Service. MEDIAGLOBAL is the global news agency, based in the United Nations Secretariat, creating awareness in the media for the countries of the global South, with a strong focus on South-South Cooperation. The picture of cattle grazing is by ILRI and comes from the wonderful photo gallery on their website.

Also see the SciDev.Net story entitled Satellite insurance to pay farmers if land turns brown, by Maina Waruru, Dec. 1, 2009.


Insurance program gets underway in northern Kenya

Hundreds of pastoralists in northern Kenya will soon be better cushioned against the effects of recurrent drought thanks to a new index-based livestock insurance (IBLI) pilot programme in the upper eastern region of Marsabit. In the past 10 years, northern Kenya, where most people raise livestock for a living, has been hit by four severe droughts.

"The insurance will help pastoralists manage the tremendous challenges they face, particularly from livestock mortality due to weather-related shocks," Andrew Mude, an economist with the International Livestock Research Institute (ILRI), told IRIN. “Index-based insurance is good for dealing with risks caused by productivity failures and reductions due to lack of rainfall.”

At the end of the two annual dry seasons, the IBLI scheme will pay out on the basis of predicted - rather than actual - livestock deaths, a percentage calculated, with help from the Arid Lands Resource Management Project, by analysing satellite images of available pasture and forage.

The insurance premium will be 5.5% of the value of the herd covered in Upper Marsabit’s Maikona and North Horr divisions, and 3.25% in Lower Marsabit's Central, Gadamoji, Laisamis, and Loyangalani divisions, as the risk is lower there. For the purposes of the scheme, herd values are expressed in Tropical Livestock Units (TLUs), with a cow, or 10 goats, or 10 sheep worth one TLU, and a camel 1.4. For the year of the pilot scheme, a TLU is worth 15,000 Kenyan shillings, about US$25.

One advantage of this scheme is that claims do not need to be verified: once pasture and forage coverage falls to a point where at least 15% of livestock is predicted to die, payouts are automatic. “It is unlike any other insurance programme. You don't have to present your livestock to be insured,” said Umuro Roba Godana, executive director of the Pastoralists Integrated Support Programme (PISP), an NGO in Marsabit.

Godana said the use of forage availability to determine whether to compensate pastoralists was a fairer assessment than "relying on the declaration of a national disaster”. Such disasters are often declared after livestock deaths have occurred. “Personally, I am going to my hometown to tell people to get this insurance,” added the Marsabit resident.

But he noted that the concept of insurance may be vague to some. "They cannot conceptualise it, insuring livestock is something new. Families with educated children may embrace this.

"The cost of the premium is reasonable compared to the loss from drought but the 15 [percent threshold] is a bit discouraging," Godana noted.

UAP Insurance Limited will provide the insurance services while Equity Bank Limited will directly engage the target client in the IBLI programme.

A partnership between the Dutch foreign ministry, Rabobank and EARS Earth Environment Monitoring is also aiming to test drought insurance for crops through two pilots in Africa. They will rely on weather data, which will feed a crop growth model to generate crop yield estimates. Some 30 years of crop yield data will be used to assess the risk of crop failure and for developing and pricing a drought insurance product.

Reliance on traditional weather forecasters may also be a challenge, Godana said. "If they [the pastoralists] are told that there will be plenty of rain in the next few seasons, why pay for the insurance then? At least when there is a drought they will understand the need [for the insurance].”

To avoid this, policies will only be sold until 28 February as the rainy season beginning in March may give the potential buyer information about the likely conditions of the season to come, unfairly affecting a purchase decision.

This story is excerpted from a story entitled KENYA: Covered for drought, datelined Nairobi, 29 Jan. 2010, and written and distributed by IRIN News, the humanitarian news agency.



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