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**Livestock Insurance in Mongolia**

December was followed by its melting and icing, leading to the so-called **iron dzud** (an impenetrable ice-cover forms over the pasture<sup>that makesgrazing</sup> impossible). In late December the snow cover became much thicker making<sup>it</sup> impossible for the livestock to graze on pasture **(white dzud).** Due to the extreme coldness in January and February and insufficient<sup>bodyweightmany</sup> thousands of livestock died from starvation and freezing."

**Hoof dzud** is also mentioned as a problem. A hoof dzuf<sup>occurswhenthereare</sup> too many hoofs in one area as herders from a problem area have<sup>movedtheir animals</sup> in an attempt to find forage. The result is over grazing.<sup>Obviouslythisproblemis</sup> not created by local weather events. In short, there are<sup>anoverwhelmingnumberof</sup> weather conditions and other factors that create dzud in<sup>Mongolia.</sup> In his 1997 master's thesis, Enkh-Amgalan created statistical models<sup>toexplain growthrateof</sup> livestock between 1969 and 1990 for 36 sum spread across Mongolia.<sup>Heattempted</sup> to explain variation in the growth rate (basically the birth rate minus<sup>themortality</sup> rate) using weather variables. This work is discouraging regarding<sup>thepotentialof</sup> any weather-based insurance for protecting against livestock losses.<sup>Enkh-Amgalan</sup> had to create a myriad of weather variables and then use stepwise<sup>regressionto</sup> obtain explanatory power with his models. Each sum had unique weather<sup>events that</sup> helped explain the growth rates.

The combination of the general descriptions of a variety of sources about the cause of a dzud and the detailed work of Enkh-Amgalan create<sup>serious concerns</sup> about the use of weather based insurance for managing herder losses.<sup>Further,while</sup> the Meteorology data appear to be of high quality, the basic stations<sup>maybetoofar</sup> apart in many regions to satisfy the requirement of weather insurance<sup>ata locallevel.</sup> Weather insurance should be considered as a means<sup>of reinsuringthealternative that</sup> is recommended in this paper. It is likely that an index of weather events<sup>couldbe</sup> created to explain the most serious insurance losses across Mongolia.<sup>Giventhat</sup> weather can now be traded in a global market, this option<sup>may offeraworkableand</sup> affordable reinsurance complement (see Skees 1999 for further details).

# **The Focused Recommendation**

Given the problems with the existing insurance program and the likely limitations of using weather insurance directly with herders,<sup>it becomesimportantto</sup> recap the overall problem.

- / It is logical that the current livestock insurance program has<sup>problems.</sup> Given the importance of understanding the core reasons for these problems, the references at the end were expanded to add other material<sup>that highlights</sup> the difficulty of providing agricultural insurance anywhere in the world.<sup>In</sup> particularly Skees and Barnett go into many of these practical<sup>and</sup> conceptual problems. Skees and Barnett provide much more detail about the conceptual problems and the literature to support the concerns<sup>about</sup>