Productive Spillovers of the Take-up of Index-Based Livestock Insurance

Does the provision of livestock insurance raise the unintended consequence of stimulating excessive herd accumulation and less environmentally-sustainable herd movement patterns? The impact of insurance is theoretically ambiguous: if precautionary savings motives for holding livestock assets dominat...

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Bibliographic Details
Main Authors Toth, Russell, Barrett, Christopher B, Bernstein, Richard, Clark, Patrick, Gomes, Carla, Mohamed, Shibia, Mude, Andrew, Taddesse, Birhanu
Format Conference Proceeding
LanguageEnglish
Published 01.06.2014
Edition329
Subjects
Community/Rural/Urban Development
East Africa
Environmental Economics and Policy
Food Security and Poverty
index-based livestock insurance
International Development
Livestock Production/Industries
mobility
pastoralism
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Summary:Does the provision of livestock insurance raise the unintended consequence of stimulating excessive herd accumulation and less environmentally-sustainable herd movement patterns? The impact of insurance is theoretically ambiguous: if precautionary savings motives for holding livestock assets dominate, then we would expect to see households that receive index insurance reduce herd sizes and move less intensively. However if risk-adjusted investment motives dominate then we would expect them to build herds and move more. “Behavioural” or norm-based responses are also possible. To test between these theoretical possibilities we use the randomized provision of livestock insurance paired with novel, high frequency data collection. The results suggest that in the presence of insurance pastoralists accumulate larger herds, and move more intensively. This has implications for the potential ecological impacts scaling up of index insurance programs on the pastoralist rangelands, and for microinsurance and pastoralism more broadly.
DOI:10.22004/ag.econ.172441