The Economic and Ecological (Side-)Effects of Index Insurance for East African Pastoralists
Felix John1, Russell Toth2, Karin Frank1, Birgit Müller1
1Helmholtz Centre for Environmental Research (UFZ), Ecological Modelling, Germany
Currently, microinsurance is considered a promising tool to combat hunger and extreme poverty in the developing world. During their 2015 summit, G7 declared their intention to increase the number of people with access to microinsurance from 100 to 500 million people by 2020. Weather-index insurance constitutes one important form of microinsurance, especially for people living in arid and semi-arid lands (ASALs). In these regions, mobile pastoralism is very common and frequently seen as the way best adapted to use the sparse and heterogeneous lands. Yet the ASALs are very vulnerable to drought. And pastoralists for whom animal husbandry is the most important income source run the risk of becoming destitute when hit by extreme droughts. While there is evidence for the immediate positive economic effects of insurance, its (long-term) ecological effects are not yet well understood. We argue that insurance can have a negative impact on the rangelands since it reduces the natural resting period that would normally occur after a drought.
Keywords: Agent-based modelling, drought, livestock, pastoralism, social-ecological systems, weather-index insurance
Contact Address: Felix John, Helmholtz Centre for Environmental Research (UFZ), Ecological Modelling, Permoserstr. 15, 04318 Leipzig, Germany, e-mail: felix.johnufz.de