Index Insurance for Forage, Pasture, and Rangeland: A Review of Developed (USA and Canada) and Developing (Kenya and Ethiopia) Countries
Abstract
:1. Introduction
2. Methods, Approach Used and Literature Search
- -
- “Forage index insurance in the USA”
- -
- “Index insurance for pasture + Canada”
- -
- “Index insurance for pasture + USA”
- -
- “Index insurance for rangelands in Canada”
- -
- “Index insurance for rangelands in the USA”
- -
- “Index insurance for prairies in North America”
Synthesis of Results
3. Index-Based Insurance
4. Existing Index Insurance Regimes in Developed (USA and Canada) and Developing (Kenya and Ethiopia) Regions
4.1. FPRI-Developed Region (USA and Canada)
- a.
- April–June;
- b.
- May–July;
- c.
- June–August;
- d.
- July–September;
- e.
- August–October.
4.1.1. Index and Grid
4.1.2. Grid Area, Dollar Coverage Levels, and Coverage Periods
4.1.3. Premiums, Subsidies, Losses, and Indemnities
- Coverage value: This is the dollar value for each forage stand, multiplied by the number of stands covered;
- Coverage level: To sign-up, producers have a choice of choosing a minimum of CAD 2000 or total forage crop value;
- Coverage alternative: Can either be the base plan, monthly weighting, bi-monthly, or three-month alternatives.
4.2. Index Insurance in Kenya and Ethiopia
- October-December: short rain.
- January-February: short, dry.
- March-May: long rain.
- June-September: long, dry.
5. Assessment of Two Regions’ Index Insurance Regimes
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Category | Exclusion Criteria |
---|---|
Time | Studies not within 1990–2024 |
Relevance | Publications not addressing the topic: index insurance for forage, pasture, and rangeland |
Shallowness | Publications considered as “too shallow” in terms of index insurance |
Insurance | Advantages | Disadvantages |
---|---|---|
Indemnity | Can cover multiple agricultural perils. | Within farms, assessment of losses makes it costly. |
Can be tailor-made to fit individual needs. | Ineffective in case of covariate losses. | |
Index insurance | Can overcome market failures such as adverse selection and moral hazards. | It does not consider individual insurance needs. |
Measuring index independently makes it transparent. | An index can have a weak correlation with loss sources resulting in insufficient payouts (basis risk). |
Selection | Description |
---|---|
Crop type | Either haying or grazing |
Grid IDs | Based on actual location |
Coverage Level | 70, 75, 80, 85, or 90 percent. Subsidy level is 59 percent for 70–75 percent coverage, 55 percent for 80–85 percent coverage, and 51 percent for 90 percent coverage. |
Productivity Factor | 60 to 150 percent of county base value in 1 percent increments |
Index Intervals | Producers select the intervals when precipitation or plant growth is most critical to the producer. |
Irrigated Practice | Irrigated or non-irrigated |
Insured Acres | Total number of perennial haying and/or grazing acres. Insurance cover from any other insurance plan is prohibited for haying or grazing, by USDA programs. |
Province | Program | Index | Temporal | Grid Size | Commencement Year |
---|---|---|---|---|---|
Alberta | Satellite | NDVI | Annual | 1 km × 1 km | 2001 |
Saskatchewan | Forage rainfall | Rainfall | April to July | Depends on weather stations | 2001 |
Country | Region | Month | Year |
---|---|---|---|
Kenya | Marsabit | January | 2010 |
Kenya | Isiolo | August | 2013 |
Kenya | Wajir | August | 2013 |
Kenya | Garissa | January | 2015 |
Kenya | Mandera | January | 2015 |
Ethiopia | Borena | July | 2012 |
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Maina, S.; Miller, M.; Torell, G.L.; Hanan, N.; Anchang, J.; Kahiu, N. Index Insurance for Forage, Pasture, and Rangeland: A Review of Developed (USA and Canada) and Developing (Kenya and Ethiopia) Countries. Sustainability 2024, 16, 3571. https://doi.org/10.3390/su16093571
Maina S, Miller M, Torell GL, Hanan N, Anchang J, Kahiu N. Index Insurance for Forage, Pasture, and Rangeland: A Review of Developed (USA and Canada) and Developing (Kenya and Ethiopia) Countries. Sustainability. 2024; 16(9):3571. https://doi.org/10.3390/su16093571
Chicago/Turabian StyleMaina, Simon, Maryfrances Miller, Gregory L. Torell, Niall Hanan, Julius Anchang, and Njoki Kahiu. 2024. "Index Insurance for Forage, Pasture, and Rangeland: A Review of Developed (USA and Canada) and Developing (Kenya and Ethiopia) Countries" Sustainability 16, no. 9: 3571. https://doi.org/10.3390/su16093571