In developing countries like Ethiopia, crop and livestock insurance in harsh climates is usually unavailable to small-scale farmers and herders. For insurance companies to examine loss claims among many small, widely dispersed and remote farms and herding communities makes their transaction costs prohibitively high. As a result, farmers and pastoralists are left without insurance, vulnerable to the whims of the weather.
But innovations in science and technology are changing this. Through collaboration among the International Livestock Research Institute (ILRI), Cornell University, donor agencies such as the United States Agency for International Development (USAID), insurance companies, local radio stations, and pastoralists themselves, a new insurance system is being tested in Ethiopia—and this one works with the weather. ILRI’s Index-Based Livestock Insurance (IBLI) project in Ethiopia is funded by USAID and two CGIAR Research Programs: on Climate Change, Agriculture and Food Security (CCAFS) and on Dryland Systems.