Droughts are a main cause of livestock mortality and poverty among pastoralists in the Horn of Africa. Index based livestock insurance (IBLI) was developed to protect pastoral households from the impacts of drought by making payouts based on satellite readings of the rangelands. IBLI has been available to pastoralists in Kenya and Ethiopia for more than ten years and has insured over USD 70 million in livestock value during this time. The first component of this study draws on administrative data from insurance firms and interviews with key actors to examine the supply and demand side drivers of diffusion of IBLI in the region. The second component of the study uses longitudinal household survey data to test for the persistence of impacts that were documented among IBLI’s clients early in the program. 

The third portion of this talk explores IBLI's potential environmental impacts. Might IBLI encourage overstocking or changed grazing behaviors that harm the rangeland systems on which pastoralists rely, ultimately undermining the product's effectiveness in reducing livestock mortality risk? Or does IBLI reduce precautionary savings in-kind, thereby reducing overstocking and improving rangeland health? The study presented combines administrative roll-out data with remotely sensed rangeland quality measures.