Insuring Peace: Index-Based Livestock Insurance, Droughts, and Conflict

This paper provides quasi-experimental evidence that Index-Based Livestock Insurance (IBLI) — a remote-sensing-triggered, automated payout scheme for pastoralists — substantially reduces drought-induced conflict in Kenya over the 2001–2020 period.

The research question is whether a market-based financial instrument can mitigate the causal chain running from drought shocks to violent conflict between nomadic pastoralists and sedentary farmers and other land users. The authors motivate the study by documenting that droughts force pastoralists out of their traditional grazing grounds and into mixed-land-use areas (farms, ranches, urban settlements, nature reserves), where miscoordination with other land users escalates into violence. A case study of the Samburu-Laikipia-Isiolo-Meru region in central Kenya — drawing on georeferenced survey data from Lengoiboni et al. (2010) and ACLED conflict events — validates this spatial mechanism: during droughts, roughly 60–90% of non-pastoral land users report encounters with pastoralists, and conflicts accumulate precisely where drought migration routes cross into non-pastoral land.

Paul Schaudt | Macro Paper Warehouse

Insuring Peace: Index-Based Livestock Insurance, Droughts, and Conflict