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Eyes in the sky: ‘Index-based’ livestock insurance for pastoral herders pilot ‘a significant success’

Landsat Celebrates 40 Years of Observing Earth

An artist’s rendition of the next Landsat satellite, the Landsat Data Continuity Mission (LDCM) that will launch in Feb 2013 (photo credit: NASA). The Landsat program is the longest continuous global record of Earth observations from space—ever. Since its first satellite went up in the summer of 1972, Landsat has been looking at our planet. The view of Earth that this 40-year satellite program has recorded allows scientists to see, in ways they never imagined, how the Earth’s surface has transformed, over time.

Michael Baron, of the UK’s Institute for Animal Health, blogs this week on Global Food Security, a new UK program uniting the country’s main public funders of food-related research, about a new insurance project led by the International Livestock Research Institute (ILRI), in Nairobi, Kenya.

‘. . . For most such small farmers and livestock keepers [in the developing world], there has until recently been no insurance to help them weather the vagaries of the weather, because there was no way for the insurers to check on actual losses.

‘In the absence of insurance to share the risks, such farmers tend to be very risk averse, even if that means not trying out new crops, or new breeds of cattle or sheep. Because they cannot afford to try new things, improvements in agricultural productivity happen slowly, if at all, which is very bad if we are all trying hard to boost global food security.

‘Recently, people like the World Bank, the UN and the World Food Programme have been looking to get around this problem by using ‘index-based insurance . . ., which . . . come up with an index that links recorded weather in an area to average harvests.

‘Farmers can then take out insurance, essentially, against the index being low. If the index goes below a certain cut off, there is a payout. As it goes lower, there is a bigger payout. The actual loss to each farmer does not have to be measured, the process is transparent, everyone is happy. This kind of insurance, only introduced in 2003, has become increasingly popular.

‘So far so good, as long as you have a lot of weather stations. In large parts of Africa, the only weather stations are in the towns, where they aren’t much use in saying how the weather has been in the rural areas.

This problem, of how to create index-based agricultural insurance in countries with limited infrastructure, has been recently tackled by economists and agricultural scientists working at the International Livestock Research Institute (ILRI) in Nairobi, Kenya.

They have come up with a rather clever solution. They realised that for nearly 30 years NASA has had satellites taking pictures as they pass over Africa—pictures from which they have been deriving useful data such as the density and spread of vegetation. For poor livestock keepers, the measure of vegetation is a measure of food availability for their animals, which is a good measure of how much milk and meat they are going to have, and how well their animals are growing.

All the satellite data are freely available, so the people at ILRI used it to develop an index that related this measure of how much vegetation there was after each rainy season with sales records from the local livestock markets and came up with an index-based livestock insurance (IBLI), which they have been running in a pilot project in the arid parts of northern Kenya.

They used local people to help spread information about IBLI, and even developed games (PDF) to help teach local livestock keepers about how the insurance worked. So far, the pilot has been a significant success story, and they are looking to expand the concept to other countries in the area. . . .

Read the whole blog at Global Food Security: From insecurity to food security, 17 Sep 2012.

Visit the Index-Based Livestock Insurance blog.

About the animal disease research of blog author Michael Baron and ILRI veterinary epidemiologist Jeffrey Mariner
Michael Baron works at the Institute for Animal Health UK) researching the basic biology of rinderpest and peste des petit ruminants (PPR), two important diseases of livestock affecting primarily animals in developing countries. He leads research to develop rapid pen-side diagnostics and improved vaccines for PPR, as well as studying the basic biology of the virus. See previous blog posts on this ILRI Clippings blog about ILRI researcher Jeffrey Mariner and the eradication of rinderpest; Mariner is also now working with a small team at ILRI on PPR; he is developing a thermostable vaccine for PPR and designing ways to disseminate, using lessons he and others learned from their work to help eradicate rinderpest.

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