Insurance against climate risks in the horn of Africa works

In countries such as Kenya, Ethiopia and Somalia, droughts are becoming more frequent, unpredictable and more severe. This forces pastoral households to engage in risky migration in search of water and grazing land, increasing tensions and conflict in the region. For the past ten years, a consortium of researchers, banks, and insurance companies has been developing insurance solutions to protect communities against these climate-related risks. An evaluation of this initiative by, among others, Karlijn Morsink of the Utrecht University School of Economics (U.S.E.) shows that the programme is making a real difference. More than 3.2 million pastoralists are now covered by this form of insurance. As a result, households are adapting their production strategies, conflicts over scarce resources have declined, and more children are able to attend school. Together, these changes are creating new opportunities for long-term development.

Because insurance against climate risks is available, people start making different kinds of investments, says Karlijn Morsink, principal investigator. They invest in activities that can increase productivity because they are now protected against major risks. They also begin to diversify their livelihoods—for example, by investing not only in livestock but also in agriculture.

Increased level of education leads to opportunities for other jobs

Another very important effect is that families start investing more in their children. Children are increasingly less likely to be used as labor, and more and more of them are attending school full-time. Ten years after the introduction of the programme, this has led to a significant increase in education levels. As a result, these children also have opportunities to pursue other types of jobs, which represents a major change. Human capital is the most important asset there is. This is truly having an impact on their lives.

Morsink emphasizes how important this is. The population in the Horn of Africa—where the three countries in the study are located—is not only among the poorest in the world, but their livestock production also provides a significant share of the food supply for large parts of Africa in the form of meat (protein). Because they are among the poorest populations, they also make up a substantial part of the migration pressure from this region of Africa toward Europe.

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Insurance and conflicts

When drought occurs, herders are forced to migrate farther in search of enough food for their animals - camels, cattle, goats, and sheep. This often brings them into areas used by other pastoralists, increasing the risk of conflict. When insurance payouts are triggered by extreme droughts, the idea is that herders can buy food and water for their animals. As a result, they no longer need to migrate such long distances, which reduces the likelihood of conflict - and therefore also the loss of both livestock and human lives.

However, the researchers also observe an increase in conflicts in the seasons following good years. After a favorable season, animals are healthy and more valuable—and therefore more attractive to steal. Conflicts can therefore also arise at times when people are actually less worried about survival.

Removing causes of conflict

In addition to evaluating the insurance programme, the research team led by Karlijn Morsink will continue its work. Future research will focus, for example, on improving public–private partnerships in innovative and effective financial products such as this insurance scheme, as well as on better understanding the relationship between resource abundance, scarcity, and conflict.

Conflict can sound like a very abstract concept, says Morsink. But I hear first-hand stories about what it means for people: the loss of loved ones, women who are raped—terrible stories. If you can then work on a program that helps reduce those conflicts, that is incredibly rewarding.

At the same time, we still do not have a solution for the fact that the risk of conflict is often highest during periods of resource abundance.

We are now developing a learning programme for young people, especially younger men, who are often involved in these conflicts. In the program, they will learn new skills—for example, to pursue activities other than livestock herding. The goal is to give them alternatives, so they no longer resort to fighting over animals out of poverty and a lack of opportunities.

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Impact in partnership with the World Bank

Implementation programs run by the World Bank normally do not include a research component. Together with colleagues at the bank, Morsink strongly advocated for adding one, because only then can the real impact of such programmess be properly assessed.

I was recently in Kenya for a meeting with the governments of Kenya, Ethiopia, and Somalia, as well as representatives from the World Bank and the private sector, Morsink says. Using the data, we can show how the programme can be improved, but also what challenges remain and how they might be addressed. Everyone there sees the value of that. I also expect the World Bank will continue integrating implementation and research more closely. Our findings are already being used in discussions about the next steps for the programme. So the question is no longer whether we will continue, but how.

The governments involved are also very engaged and actively thinking along with us. As a researcher, when you see that governments are listening to your findings and then translating them into policy - and when you know that this has an impact on the lives of 3.2 million pastoralists—well, that is exactly what you hope to achieve.

Collaborators

International Livestock Research Institute, University of Edinburgh, Globe Research Consultancy Services, AIID Africa, University of Nairobi, Wageningen University & Research, Cornell University, Center for the Economic Analysis of Risk, International Alert.

Research team

The following people are involved in this project:  From the Utrecht University School of Economics: Karlijn Morsink (principal investigator), Samin Nikkhah Bahrami (PhD student), Mia Ravbar (PhD student) and Anouk van Veldhoven (PhD student). From the Department of Methods & Statistics: Mahdi Shafiee Kamalabad (researcher).

More information

Want to know more? Please contact  Karlijn Morsink: k.morsink@uu.nl.

Read more about this project in the blog on Financial Protection Forum or in the news item about the study (2024).