Satellite images of remote African lands are used to insure herders from devastating droughts
Thousands of herders in arid areas of northern Kenya will be able to purchase insurance policies for their livestock, based on a first-of-its-kind program in Africa that uses satellite images of grass and other vegetation that indicate whether drought will put their camels, cows, goats and sheep at risk of starvation.
The project was announced today in northern Kenya’s arid Marsabit District by the Nairobi-based International Livestock Research Institute (ILRI), microfinance pioneer Equity Bank and African insurance provider UAP Insurance Ltd.
The index-based livestock insurance program will use satellite imagery to determine potential losses of livestock forage and issue payouts to participating herders when incidences of drought are expected to occur. If successful in the Marsabit District—where few of the 86,000 cattle and two million sheep and goat populations, valued at $67 million for milk and other products, are rarely slaughtered—the program would be offered to millions of semi-nomadic pastoralists and livestock keepers in other parts of the east African region.
“Today, our agents will begin selling insurance policies backed by UAP that for the first time will provide pastoral families in Kenya’s remote Marsabit District with a simple way to reduce their drought risk —the biggest threat to their cherished herds of cattle, sheep, goats, and camels—from devastating lives and livelihoods,” said Equity Bank Managing Director James Mwangi. “Livestock is the key asset for families in this region and securing this asset is critical to their ability to obtain credit and investments that can allow them to grow and prosper.”
ILRI, which is part of the Consultative Group on International Agricultural Research (CGIAR), developed the project with partners at the Ministry of Development of Northern Kenya, Cornell University, Syracuse University, the BASIS program at University of Wisconsin, and the Index Insurance Innovation Initiative. The project is funded by UK’s Department for International Development (DFID), United States Agency for International Development (USAID), the World Bank and Financial Sector Deepening Trust (FSD Kenya).
Insuring livestock of pastoral families has long had been considered impossible due to the formidable challenges of verifying deaths of animals that regularly are moved over vast tracts of land in search of food. ILRI and its partners have overcome this impediment by combining satellite images of vegetation in the Marsabit District with monthly surveys of livestock deaths to pinpoint the level of forage reduction that will cause animals to die. This program is different from all others because it does not pay clients based on the actual loss of their livestock assets, but rather on indicators that the animals are at risk of death.
“The reason this system can work is that getting compensation does not require verifying that an animal is actually dead,” said Andrew Mude, who is the project leader at ILRI. “Payments kick in when the satellite images, which are available practically in real time, show us that forage has become so scarce that animals are likely to perish.”
Droughts are frequent in the region—there have been 28 in the last 100 years and four in the past decade alone—and the losses they inflict on herders can quickly push pastoralist families into poverty. For example, the drought of 2000 was blamed for major animal losses in the district.
“Insurance is something of the Holy Grail for those of us who work with African livestock, particularly for pastoralists who could use insurance both as a hedge against drought—a threat that will become more common in some regions as the climate changes—and to increase their earning potential,” said ILRI Director General Carlos Seré.
The cost of the plans offered will vary depending on the number of animals and the area of coverage. The policies contain a clause akin to a deductible, in which a family would buy coverage that would pay-out when livestock losses are expected to exceed a certain level. “We believe this program has potential because it has the elements insurers need to operate, which is a well-known risk (drought), and an external indicator that is verifiable and can’t be manipulated, which in this case is satellite images of the vegetation,” said James Wambugu, Managing Director of UAP Insurance.
The data on forage availability are derived from satellite images of plant growth in the region that are part of a global survey known as the Normalized Difference Vegetation Index, or NDVI, a database regularly updated by scientists at the US National Oceanic and Atmospheric Administration (NOAA) and the US National Aeronautics and Space Administration (NASA). To develop the livestock insurance program, ILRI used NDVI data collected since 1981 estimating forage availability vegetation in the Marsabit District. This information was combined with data on livestock deaths that have been collected monthly since 2000 by the Kenya Arid Lands Resource Management Project (ALRMP) and USAID’s Pastoral Risk Management Project. The result is a statistical model that reliably predicts when and to what degree forage reductions will result in drought-related livestock deaths.
Given the complexity of index-based livestock insurance, ILRI and its partners have developed an insurance simulation game for local communities to explain the key features of the insurance policy and tested it across the Marsabit District. ILRI’s Mude said many of the herders who played the game became intensely involved in the simulation. “It helps them understand how insurance can protect them against losses. They also appear to simply enjoy playing the game itself, which generates a lot of animated discussion,” said Mude.
Mude said there is a potential for livestock insurance to be valuable even without a drought that triggers payments. For example, a policy could prevent stock losses by providing pastoralists the means to obtain credit for purchasing feed and drugs that would allow animals to survive the tough conditions. Similarly, pastoralists who want to expand their herds to take advantage of Africa’s rising demand for livestock products are likely to find it easier to obtain capital from private creditors now unwilling to lend due to the risks associated with droughts.
But more fundamentally, ILRI believes insurance can help avert an all too common catastrophe, and one that could occur with more regularity if climate change alters rainfall patterns in the region: droughts pushing pastoralist families into chronic impoverishment by inflicting losses from which the people cannot recover.
For further background information on project details visit the IBLI website and associates ILRI stories
As the board of trustees of the International Livestock Research Institute (ILRI) meets in Addis Ababa, Ethiopia, this week, reviewing ILRI’s animal health research among other work, an ILRI vaccine project is highlighted in a new publication, DFID Research 2009–2010: Providing research evidence that enables poverty reduction. The UK Department for International Development (DFID) and the Bill & Melinda Gates Foundation both support the Global Alliance in Livestock Veterinary Medicines (GALVmed), which works to convert existing or near-market technologies into livestock medicines and vaccines for use in developing countries. The notable success of this strategy in 2009, says DFID, is an East Coast fever vaccine produced by ILRI. East Coast fever is a tick-transmitted disease that kills one cow every 30 seconds in eastern, central and southern Africa, where it threatens some 25 million cattle in 11 countries and is now putting at risk a further 10 million animals in new regions, such as southern Sudan, where the disease has been spreading at a rate of more than 30 kilometres a year. The disease is a major cattle killer. In herds kept by the pastoralist Maasai, it kills 20–50% of all unvaccinated calves, which makes it difficult and often impossible for the herders to plan for the future or to improve their livestock enterprises. A vaccine for East Coast fever could save over a million cattle and up to £170 million a year in the 11 countries where the disease is now endemic. An experimental vaccine against East Coast fever, which makes use of live but weakened parasites, has existed for more than three decades, with batches mass produced in ILRI’s Nairobi laboratories. Although constrained by the need for a ‘cold chain’ to keep the ‘live’ vaccine viable, field use of this vaccine in Tanzania and elsewhere has proved it to be highly effective and in demand by poor livestock keepers, who are paying for the vaccine to keep their animals alive. GALVmed has worked with ILRI and private companies, such as VetAgro Tanzania Ltd., to make East Coast fever vaccine available to the livestock keepers who need it most and to scale up production in future. With £16.5 million provided by DFID and the BMGF, GALVmed began working on the registration and commercial distribution and delivery of a new batch of the vaccine produced by ILRI. The vaccine was successfully registered in 2009 in Malawi and Kenya, with Tanzania and Uganda expected to follow soon. If it is approved in Uganda, it will be the first veterinary vaccine formally registered in that country. GALVmed is now working to establish viable commercial production and delivery systems, aiming that by the end of 2011, all aspects of the production and delivery of East Coast fever vaccine are in private hands.
