Ecological Vulnerability Through Livestock Insurance?

Increasingly frequent and severe droughts pose a big challenge for pastoralists in the Horn of Africa. Livestock drought insurance (LDI) is being tested as a means to manage these risks. In the article “Ecological vulnerability through insurance? Potential unintended consequences of livestock drought insurance” (2019), published in Ecological Economics 157: 357–368, Felix John and co-authors show that LDI may encourage too rapid restocking, leading to pasture degradation.

They studied the potential long-term effects of LDI on pasture conditions at scale with the help of an agent-based model aligned to the environmental context of pastoralist groups straddling the border between Ethiopia and Kenya. The authors looked at whether, if insurance is taken up at scale, the quick reconstitution of herds that insurance enables after droughts could disrupt natural pasture recovery dynamics and reduce the long-run carrying capacity of the vegetation. The results indeed showed that, especially if pastures are very sensitive to grazing, insurance can cause and/or intensify ecological instability. Furthermore, these unintended ecological consequences are most likely to occur there where insurance is needed the most.