“No silver bullet”Complementary approaches to supporting

pastoral risk management in Mongolia

Presentation to the China Grassland Conservation Network

Beijing, January 15, 2007

Dr. Robin Mearns, World Bank (Vietnam Office)

Key trends in post-socialist Mongolia

• Decollectivization post-1991 led to hybridization of formal rural institutions and decline in herder mobility

• Burden of risk shifted dramatically from state/collective institutions to herders

• Pastoral livestock sector performed crucial role as an economy-wide safety net

• Net urban-to-rural migration in early-mid 1990s led to doubling of herder numbers

• Consecutive dzud episodes over 1999-2002• Subsequent reversal in net migration patterns

increased concentration in central region

Emergent action-research community of practice

• PALD: a collaborative research and training project between IDS Sussex (UK) and Mongolian research institutions (1991-94)

• Same individuals continued to work together in action-research and consulting activities for ADB, Danida, FAO, World Bank, etc.

• Key Mongolian researchers trained overseas and/or collaborated with foreign researchers

• Founding of Centre for Policy Research (CPR)• Global Livestock Collaborative Research Support

Program (GL-CRSP) & Gobi Forage• With long gestation, community of practice has evolved

into a driving force for progressive policy development

Theoretical underpinnings

• Non-equilibrium perspectives in range ecology

• ‘Fuzzy’ boundaries, both of resources and groups of resource users

• Common-pool resource management where exclusion is difficult

• Beyond the ‘tragedy of the commons’• Sustainable livelihoods approaches• Economies of scope in collective action

Kinship and community

• Example of Oroin-Tovgor bag, Tsetsen-Uul sum, Zavkhan

• constructed genealogy of bag using card-sorting technique

• almost all 100+ households inter-related by blood or marriage

• these people know each other!

The result...

Those not related to others tended to be among both richest and poorest

Government policy and operational responses

• 1994 and 2002 Land Laws– A broadly permissive framework for pastoral land

tenure?– Persistent ambiguities regarding possibility of

controlling access/ excluding some users

• National Poverty Alleviation Programme (1995-2000): ‘welfarist’

• Household Livelihoods Capacity Support Programme (2000-date): emphasis on ‘self-help’

World Bank-supported interventions

• Poverty Alleviation for Vulnerable Groups Project (1996-2000)– Local development funds for basic infrastructure provision,

revolving loan funds for income-generating activities, restocking (post-1999)

• Participatory Living Standards Assessment 2000– Focused attention on risk and vulnerability

• Sustainable Livelihoods Program (Phase 1 2002-07; Phase 2 2007-11)– Pastoral risk management (new), local initiative funds, micro-

finance outreach– Japan Social Development Fund supporting ‘Community

Mobilization for Sustainable Livelihoods’• Index-Based Livestock Insurance Project (2004-date)

Conceptual framework for PRMStrategies ►

Levels of intervention ▼

Disaster management

General risk management

(land, NRM etc.)

Diversification & market access

National

Sub-national (‘meso’)

Community

The Mongolia case: 1Strategies ►

Levels of intervention ▼

Disaster management

General risk management

(land, NRM etc.)

Diversification & market access

National

Sub-national (‘meso’)

Community

Index-based livestockinsurance

Grazing reserves

dzud preparedness/ contingency

planning

Mobility

Restocking

Why Insurance?

Livestock losses in Mongolia

0%2%4%6%8%

10%12%14%16%18%20%

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

year% 2002 GDP % livestock value

Dundgov’ aimag in April 2000, following the worst dzud in living memory

Expecting a harsh winter again, following severe drought duringthe summer, Tsevel of Saintsagaan sum, Dundgov’, shows the only winter feed she was able to prepare this summer:

highly inferior Caragana sp. (August 5, 2000)

Spatial data product example:Spatial data product example: DEPARTURE FROM AVERAGE VEGETATION DEPARTURE FROM AVERAGE VEGETATION

INDEXINDEX

Animals Losses – Bad Years Value Animals

2001 25% 17%

2000 15% 12%

2002 11% 13%

1977 8% 9%

2003 7% 5%

1993 7% 6%

1983 7% 7%

1980 7% 6%

Differences in Relative Risk Will Result in Different Premium Rates

Pilot Scheme Layers the Risk

100% Mortality

30% Mortality

10% Mortality

Disaster Relief Program

Base Insurance Product

Retained by Herders and Banks

Index-based livestock insurance pilot• 2006 first sales season• 10% of herders bought insurance; twice the target• lenders already offering lower interest rates to herderswith coverage

The Mongolia case: 1Strategies ►

Levels of intervention ▼

Disaster management

General risk management

(land, NRM etc.)

Diversification & market access

National

Sub-national (‘meso’)

Community

Index-based livestockinsurance

Grazing reserves

dzud preparedness/ contingency

planning

Mobility

Restocking

On the move: ◄ otor

Bag meeting ►

Restocking beneficiariesBayarsaikhan and his son, Gurvanbulag sum, Bayankhongor;

Naranchimeg and Sarav of Zag sum, BayankhongorAugust 9, 2000

The Mongolia case: 2Strategies ►

Levels of intervention ▼

Disaster management

General risk management

(land, NRM etc.)

Diversification & market access

National

Meso

Community

Index-based livestockInsurance

Grazing reserves

dzud preparedness/ contingency

planning

Public awarenessHerder groups

Mobility

Water pointrehab

National Councilon PRM

Restocking

Pastoral Risk Management Component

Key Achievements Development of pasture mapping and preliminary risk

contingency planning in all 142 sums Rehabilitation of 314 engineered wells providing

additional water resources and improving access to underused pasture

Rehabilitation and construction of 2 inter-aimag otor storage facilities, plus rehabilitation of 8 engineered wells

313 herder NGOs formed with the support of the project, of which 123 received loans

14 hay and fodder emergency storage facilities have been rehabilitated which has doubled the amount of hay and tripled the amount of fodder stored

Pastoral Risk Management Component

Key Challenges• Establishing an institutional framework for

pastoral risk management at national level and in the project aimags remains a challenge (and a requirement to move to Phase 2)

• For long-term sustainability, the activities supported by the project need to be institutionalized at all levels within government

The Mongolia case: 3Strategies ►

Levels of intervention ▼

Disaster management

General risk management

(land, NRM etc.)

Diversification & market access

National

Meso

Community

Index-based livestockInsurance

Grazing reserves

dzud preparedness/ contingency

planningPublic awareness

Herder groups

Mobility

Water pointrehab

National Councilon PRM

Microfinanceoutreach

Value-chainactivities?

(SLP2)

‘CDD’/basic infrastructureRestocking

Local Initiatives Fund

A demand-led window for financing public goods provision

Key Achievements Implementation of almost 1,983 sub-projects for a total

value of US$7.2 million

61% of sub-projects in education sector

30% for improvement of hospital facilities

7% for drinking water, bath houses, and other

           

Microfinance OutreachKey Achievements Wholesale loans to 15 PFIs (commercial banks and non-bank FIs)

totalling US$7 million Has resulted in US$12 million in on-lending to rural people (including

re-disbursements) Over 22,000 sub-loans disbursed, benefiting an estimated 111,000

people (14% of target population, exceeding target of 10%) Repayment rate of sub-loans is 98.2% and 100% from PFIs to the MDF Over 60% of on-lending to sub-borrowers at the sum and bag level Around 40% of sub-loans to poor households Over 40% of sub-loans to first-time borrowers 92% of loans used for income-generating activities