The Positive Impact of Index Based-Livestock Insurance (IBLI) on Pastoral Systems: Evidence from Rangelands of Northern Kenya

Livestock production continues to serve as a critical foundation for livelihoods and economic resilience in the arid and semi-arid lands (ASALs) of northern Kenya, where pastoralism remains the dominant livelihood strategy. In the rangeland ecosystems of Turkana and West Pokot counties, the sustainability of pastoral systems is vital for the socio-economic well-being of local communities. However, these systems face increasing pressure from recurrent droughts and climate variability, which severely threaten forage availability and livestock productivity. These challenges underscore the urgent need for innovative and scalable risk management approaches. This study examines the effectiveness of Index-Based Livestock Insurance (IBLI) as a tool for supporting sustainable rangeland-based pastoral systems in northern Kenya. Specifically, it assesses the empirical impact of IBLI adoption using the Enhanced Vegetation Index (EVI) as a proxy for forage availability. Employing a Difference-in-Differences (DID) approach with fixed effects, we analyze panel data derived from high-resolution MODIS-NASA satellite imagery spanning the years 2003 to 2021. The analysis focuses on determining the causal effects of IBLI adoption on rangeland health and pastoralist resilience in Turkana and West Pokot. Our findings indicate that IBLI adoption is associated with a statistically significant improvement in rangeland conditions, estimated at approximately 4%. Additional DID analyses suggest that this improvement is driven by enhanced forage sustenance, which itself shows a positive effect in the range of 3% to 4%. These results highlight the dual role of IBLI as both a household-level financial risk buffer and an enabler of ecological stability in pastoral systems. Overall, the study provides robust empirical evidence supporting the role of IBLI as an effective climate risk mitigation strategy. It contributes to the growing body of knowledge on sustainable pastoralism in ASALs and offers timely, policy-relevant insights for the expansion of IBLI programs across other drought-prone regions of Sub-Saharan Africa. By fostering both economic and ecological resilience, IBLI represents a promising pathway for strengthening the adaptive capacity of pastoralist communities in the face of escalating climate risks.