Evaluating the Poverty-Reducing Impact of Index-Based Livestock Insurance in Kenya’s Arid Regions: Evidence from Hadado Sub-County

Tore Kipngetich Nelson, James Muita Kinyua, Hezron Nyarindo Isaboke, Samwel Macharia Chege and John K. Musyoka

Asian Journal of Agricultural Extension, Economics & Sociology, 2025, vol. 43, issue 10

Abstract: Repeated droughts in Kenya’s arid and semi-arid regions erode livestock assets and perpetuate poverty among pastoralist households. Index-Based Livestock Insurance (IBLI) offers potential for mitigating such risks, yet empirical evidence of poverty reduction remains limited. This study analyzed primary data from 286 households in Wajir County using a Difference-in-Differences (DiD) regression framework to estimate the effect of IBLI on household poverty. The results demonstrate that IBLI participation significantly reduces poverty, with insured households experiencing a 1.35-point decline in the poverty index relative to non-participants (B = −1.350, p = .001). Moreover, the interaction between IBLI and the midline phase indicates an additional reduction (B = −1.253, p = .014), suggesting that program benefits strengthened as coverage expanded and implementation improved. These findings reveal a cumulative impact, where early gains deepen over time with sustained exposure to insurance. The results align with theoretical and empirical literature showing that index insurance protects assets, smooth consumption, and prevents poverty traps. Policy recommendations emphasize awareness creation, affordability, and timely claim settlement to enhance uptake and strengthen IBLI’s role as a social protection mechanism in drought-prone regions.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/389095/files/Nelson43102025AJAEES144068.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:ajaees:389095

Access Statistics for this article

More articles in Asian Journal of Agricultural Extension, Economics & Sociology from Asian Journal of Agricultural Extension, Economics & Sociology
Bibliographic data for series maintained by AgEcon Search ().