Archive | April 17, 2014

New insurance product protects pastoralists from losses due to drought in Kenya

This is rather interesting. Pastoralism is characterized as a complex system of avoiding, accounting for and taking advantage of risk, not unlike hedge fund managers in the United States. Animals represent potential earnings, prices at markets vary with grazing conditions and perceived long term benefits, and decisions to sell animals are not made lightly.

In the past, pastoralists have protected against devastating losses through herd maximization and cooperation and conflict over prime grazing spots, along with systems of redistribution where animals from wealthy herders are given away or stolen with the approval of the community. The world has become complicated, though, as droughts become more and more frequent, political borders and conflicts constrain the movements of pastoralists, and as the spear has been replaced with the AK-47.

An interesting though appropriate insurance system might help to mitigate losses and stabilize communities.

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