Covering elephant tracks: can insurance compensate farmers for wildlife damage?

A new IIED-led project in Kenya and Sri Lanka is exploring whether insurance schemes can compensate women and men small-scale farmers for crop and property damage caused by human-wildlife conflict, primarily from elephants. 

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Insight by 
Paul Steele
Dilys Roe
Paul Steele is IIED's chief economist; Dilys Roe is principal researcher in IIED's Natural Resources research group
27 March 2019
Four elephants roam the plain on the Maasai Mara, Kenya

A Kenyan woman’s maize crop which is a favoured food for elephants (Photo: Bread for the World, Creative Commons, via Flickr)

Across Africa and Asia, elephants impose major economic and human costs on poor women and men farmers, particularly around protected areas. They trample or eat crops, damage property, inflict human injury or even cause death. These interactions between people and elephants can spiral into conflict.

The damage caused by human-wildlife conflict (HWC) can lead to local people killing wildlife in defence or revenge, and even support illegal killing by external poachers. At the same time, local people suffer through lost income, unaffordable damage costs and in extreme circumstances, loss of family members. 

Globally, different interventions have sought to reduce HWC. From preventative measures – including fences and livestock corrals – to reactive measures such as financial mitigation. But these vary in success and are often implemented without the support or participation of local people.

Pilot roll-out 

Insurance is an important mechanism for HWC management and has the potential to offset costs for local people and bring about behaviour change. However, it has been difficult to develop schemes that involve commercial insurance companies and there are challenges to overcome in making insurance for HWC work for people and wildlife.

The Livelihoods Insurance from Elephants (LIFE) in Kenya and Sri Lanka project funded by the UK’s Darwin Initiative will help the governments of Kenya and Sri Lanka pilot new insurance schemes, develop an effective national approach to tackle HWC and learn from each other and share lessons internationally.  

In Sri Lanka the work is being led by national economic think thank the Institute of Policy Studies (IPS) while in Kenya we are working with  leading insurance consultancy AB Consultants.  

The problem of HWC is acute in both countries: Sri Lanka documents over 70 human and 200 elephant mortalities annually from conflict; Kenya reports that 50-120 problem elephants are shot by wildlife authorities each year and that about 200 people died in human-elephant conflict between 2010 and 2017.

Dr Sumith Pilapitiya, former Director General of the Department of Wildlife Conservation, and IIED's chief economist Paul Steele discuss how livelihood insurance can provide a solution to human-elephant conflict in Sri Lanka.

What have we learnt so far?

The project has reviewed what we can learn from existing insurance schemes including those that specifically address HWC and those that have been developed to support other risks faced by small farmers in poor countries including drought, hail stone damage and other climate risks. The purpose of the review was to explore solutions to challenges in implementing HWC insurance schemes.

Four challenges emerged: 

  1. Cost effective insurance administration    
  2. Timely and fair insurance payments  
  3. Incentives for damage prevention, and
  4. Financial sustainability of premium payments.

A Kenyan woman’s maize crop which is a favoured food for elephants (Photo: Bread for the World, Creative Commons, via Flickr)

Some of the schemes reviewed have overcome these challenges by focusing on community-based solutions, innovative financial design and effective partnerships. Specific lessons learned include:

  • Future insurance schemes for HWC mitigation will benefit from more accurate data. Little data capture exists outside of claims for current HWC insurance schemes, but commercial insurers will need access to more information to price premiums fairly and accurately. Technology is likely to play an important role in the future – microinsurance initiatives are already harnessing this through mobiles and SMS.
  • People suffering from HWC need to be fairly compensated for their loss, with quick verification and timely payments to ensure success. This has been shown in a snow leopard insurance scheme from Pakistan, which uses an innovative ecotourism fund to fully compensate farmers in the event of livestock depredation. Unlike other schemes, verification is locally managed meaning farmers don’t suffer lengthy delays, leading to almost universal participation.
  • Payments should be linked to the implementation of preventative measures such as fences and corrals to protect crops and livestock. In Italy, a failed insurance scheme did not adequately enforce these conditions on farmers. Livestock predation continued and so too did animosity toward wild animals. Some schemes have overcome this by providing a one-off payment to farmers for damage prevention.
  • Financial stability is easier to achieve if you have support from partners. Achieving financial stability is a major challenge but insurance schemes linked to ecotourism activities or local NGOs have shown collaboration can lead to success. Microinsurance initiatives have also benefited from a variety of distributor channels that act as intermediaries between insurance companies and farmers.

The next step is to use these lessons learned from this review to design, with commercial insurance companies, a pilot insurance scheme in selected areas of Kenya and Sri Lanka.  

After a year of implementation these pilots will be evaluated and lessons shared among the two countries and with international experts from the conservation and insurance community. This will feed into international advocacy and a global alliance to highlight solutions to HWC in the run up to the Convention on Biological Diversity Conference of the Parties at the end of 2020.

About the author

Paul Steele ([email protected]) is IIED's chief economist.

Dilys Roe ([email protected]) is principal researcher in IIED's Natural Resources research group.

With thanks to Olivia Wilson-Holt, consultant researcher in IIED’s biodiversity team, who co-authored this blog.

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