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Index Based Livestock Insurance Project Mongolia: Additional Financing

Published by:
Publication date
Type of Publication:
Working Papers & Briefs
Focus Region:
Asia and the Pacific
Focus Topic:
Climate / Weather / Environment
Type of Risk:
Natural disasters
Type of Risk Managment Option:
Risk transfer
International Developmemt Association (IDA)
The World Bank

The Government of Mongolia requested assistance from the World Bank to improve rural herder vulnerability to frequent and high livestock mortality rates. Large-scale goat, sheep, cattle, yak, horse and camel deaths, as a result of Mongolia’s harsh and unforgiving climate, were devastating the rural poor and Mongolia’s economy. The Mongolian rural economy is based on livestock reared by semi-nomadic herders who make up 30 percent of the population. Agriculture contributes around 20 per cent of the country’s gross domestic product (GDP) and herding accounts for more than 80 per cent of this. Livestock provide sustenance, income and wealth to nearly half the residents of Mongolia. Dzud events (the Mongolian term for a particularly bad winter), which occur approximately once every five years, result in the death of millions of the country’s livestock.

This project paper seeks to provide an additional credit to Mongolia Index-based Livestock Insurance Project. The additional credit will help finance the costs associated with scaling up the project from four provinces (aimags) up to an additional seventeen, depending on availability of funds. The performance of the parent project has been satisfactory and has sufficiently demonstrated that a phased scale up is now appropriate to further test viability on a larger scale. At the project’s close, the viability of the insurance will be demonstrated by the establishment of a sustainable institutional framework and capacity to operate the scheme, as well as continued willingness of insurance companies and herders to participate. The project will be streamlined based on experiences learned from the parent project however the basic design of the project will remain unchanged, with the exception of dropping the Disaster Response Product (DRP), which, while conceptually sound, has not been widely adopted and needs to be channeled though a different institutional structure. Government Catastrophe Coverage (GCC) will be introduced as a non-commercial portion of the renamed livestock risk insurance. The project development objective is modified to reflect the shift from piloting to scaling up and building capacity for sustainability.