Publication: Examining the Feasibility of Livestock Insurance in Mongolia
Date
2002-09
ISSN
Published
2002-09
Author(s)
Skees, Jerry R.
Enkh-Amgalan, Ayurzana
Abstract
Herders in Mongolia have suffered
tremendous losses in recent dzud (winter disasters), with
livestock mortality rates of over 50 percent in some
locales. This study examines the feasibility of offering
insurance to compensate for animal deaths. Such an
undertaking is challenging in any country. Mongolia offers
even more challenges given the vast territory in which
herders tend over 30 million animals. Traditional approaches
that insure individual animals are simply not workable. The
opportunities for fraud and abuse are significant.
Monitoring costs required to mitigate this behavior would be
very high. This study focuses on the potential for using the
livestock mortality rate at a local level (for example, the
sum or rural district) as the basis for indemnifying
herders. Applications of index insurance are growing around
the world, although no country has so far implemented such
insurance for livestock deaths. But few countries have such
frequent and high rates of localized animal deaths as does
Mongolia, and it is one of the few countries that perform an
animal census every year. This concept may therefore be
precisely what is needed to start a social livestock
insurance program. Just as important, the insurance that is
used in Mongolia should not interfere with the exceptional
efforts that experienced herders take to save animals during
severe weather. Using an individual insurance may, in fact,
diminish these efforts. Herders may ask, "Why should I
work so hard to save my animals if I will simply be
compensated for those that are lost?" Since the index
insurance would pay all herders in the same region the same
rate, the incentives for management to mitigate livestock
losses remain strong. No one would reduce their effort to
collect on insurance. Those who increase their efforts
during a major event (dzud) would likely be compensated for
this effort even though they do not lose livestock. In some
cases, they could reasonably expect to receive payments that
would compensate for the added effort or the added cost of
trying to save their livestock.
Citation
“Skees, Jerry R.; Enkh-Amgalan, Ayurzana. 2002. Examining the Feasibility of Livestock Insurance in Mongolia. Policy Research Working Paper;No. 2886. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/19291 License: CC BY 3.0 IGO.”
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