Switch to Desktop Site
 
 

Farm aid from space

Next Previous

Page 2 of 4

About these ads

"The idea with an index is, instead of providing a payout based on crop loss, you provide a payout based on something you can measure independently," says Dan Osgood, associate research scientist at the International Research Institute for Climate and Society at Columbia University.

Data gathered by 'moving stars'

In Kenya, they're measuring something slightly different. Mr. Mude and his team use the Normalized Difference Vegetation Index, or NDVI. "This is the measure of the greenness level on the ground," says Mude. "It's a very good predictor for us of ... the nutrition available for livestock," which eat the green vegetation.

The index is maintained by NASA, which has been using satellites to take pictures of the area since 1980. Such a long track record of data allowed Mude to test what seem, at first, like simple hypotheses: Does drought correspond to less greenery, and less greenery to high rates of cattle deaths?

"It certainly wasn't a given," Mude says. "If the relationship was not strong, then the index would not have value." But the tests worked, and the data became a proxy for livestock mortality: Insurance companies could use the proven relationship between vegetation and cattle deaths to build a complex formula that allows them to offer policies with affordable premiums to herders. For $10, a farmer in the driest part of the district can insure one cow. If grass levels fall below a certain point, the herder gets a payment of $200 per insured cow. Mude expects herders to insure about 50 percent of their herd in this pilot year.

This sidesteps the biggest problem of any insurance program: the moral hazard.

"If you're a farmer and you have [traditional] insurance," Mr. Osgood says, "you have an incentive to let your crops do badly, and the insurance company has to be very good at measuring how your crops are doing and making sure you're not letting them do badly."

Next Previous

Page 2 of 4

Share