Duration: 5 Years
Technical Partners:
Implementing Partners:
- Oromiya Insurance Company
- Oromia Credit and Saving Share Company (OCSSCO)
- Oromiya Pastoral Area Development Commission
Donors:
Product Summary
The IBLI index for Borana uses cumulative deviation from normal conditions, of area aggregate observations of the satellite-based vegetation index (NDVI). This coverage of rangelands is within a given boundary such as a woreda, independently or combined. It indemnifies insurance contract holders when the forage availability falls below the 15th percentile of the seasonal historical cumulative deviation (from normal conditions). IBLI insures pastoralists against forage deterioration that can lead to drought, resulting in livestock deaths. IBLI does not cover any other causes of livestock deaths.
Cumulative deviation of pasture availability index
The IBLI index used is called the Cumulative deviation of pasture availability index (CZNDVI).
Pasture availability index (CZNDVI) monitors forage conditions using satellite images for two seasons in 12 months. The data on pasture availability is captured from a satellite position for every 250m by 250m pixel for a particular 16 days-period. The calculation is based on the deviation of the pasture condition from the normal/ average forage condition, for that geographical location within that 16 day period , at that particular time of the year. The deviation is cumulated over the insurance coverage season in order to measure degree of forage deterioration.
As drought is the continuous deterioration of forage condition over a period of time (a season according to our model), and livestock will only perish due to forage starvation after a prolonged scarcity. We denote cumulative deviation of forage condition by CZNDVI.
The deviation measures how a 16 days-time forage is/has performed compared to what is normal (average forage condition) for that specific location. Statistical deviation is represented by Z, the deviation of forage from normal condition is denoted by ZNDVI.
Payout Function
Payout or indemnity is the function of:
- Current-end-of-season cumulative deviation of pasture availability index (CZNDVI).
- The strike level: is the historical cumulative deviation of pasture availability index (CZNDVI) at which indemnity starts to be paid as per the contractual agreement
- The Exit level: is the level of seasonal cumulative deviation of pasture availability index (CZNDVI) reading, which indicates the worst drought case in a 32 year history. It is specific for each woreda and each season.
- The insured herd value: which equals the number of livestock insured multiplied by the average market price…(see diagrammatic representation) payout function
Background Documents:
Index-Based Livestock Insurance 
