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**Liv2stock Insurance in Mongolia**

The banking community is very hesitant to loan money<sup>toherders.TheAgBank</sup> of Mongolia is involved in the new micro-finance<sup>initiativetomakea fewselectloansto</sup> herders. Managers of private banks in Mongolia<sup>appear to makeveryfewloans to herders</sup> and cite the risk as the major reason. Bankers who were presented with the idea of insuring based on mortality losses within the<sup>sumexpressedakeeninterestinthis</sup> alternative insurance. They understood the potential<sup>valueandindicatedthatif such</sup> insurance were available they would consider<sup>loaning toherders.</sup> Given the strong reactions from managers of private banks, the<sup>possibilityoflinkingsuch insuranceto</sup> loans with the micro-finance initiatives underway<sup>is worthfurther consideration.</sup>

# _Potential Opportunities for Weather Based Insurance_

There is a growing interest in weather based<sup>insurance aroundtheworld.These</sup> new markets and insurance products may offer<sup>somepotentialinMongolia.The World</sup> Bank has been involved with investigating<sup>theopportunityforsuchinsurancein</sup> Morocco, Mexico, Tunisia, Ethiopia, and Nicaragua.<sup>Moroccoisveryclosetooffering</sup> sunflower and cereal grain farmers insurance<sup>thatwould paywhenrainfallisbelow</sup> certain thresholds during critical growing periods.<sup>Mexicoisconsideringusing similar</sup> rainfall policies to finance natural disaster relief<sup>efforts by provinces.</sup> The Mongolia Meteorology Agency is a<sup>professionallymanagedagencywitha</sup> long history of collecting detailed weather data.<sup>The current directoris also thepresident</sup> of the World Meteorology Organization of Asia.<sup>MongoliafollowstheWMOstandards</sup> and has done so for several decades. Quality data<sup>shouldbeavailableformostweather</sup> statistics. Further, the Meteorology Agency has conducted<sup>numerousstudiesand</sup> developed detailed maps of a great number<sup>ofweatherdata.</sup> The data have been processed into useful information and it is<sup>clear thatthe agency playsa major rolein both</sup> early warning systems as well as helping explain<sup>causesaftermajor eventsin Mongolia.</sup> Drought is a significant problem in Mongolia.<sup>Thus,thereissomepotentialto</sup> investigate offering insurance against rainfall<sup>shortfallsduringthecriticalmonthsof June</sup> and July. As John Morton points out in his report,<sup>suchinsurancecould provide timely</sup> payments that would be used to purchase fodder<sup>andotherfeedspriortogoing intothe</sup> winter. Further, the combination of drought<sup>duringthesummermonths followedby</sup> extreme cold during the following winter<sup>maybeanoptionworth consideration.</sup> However, it is also true that a multitude of weather<sup>eventscreateadzud.Thedescription</sup> from "Lessons Learnt from the Dzud 1999-2000"<sup>bytheUJNDPprovidesanexcellent</sup> summary of the multitude of causes: "The main cause of Dzud disaster in affected<sup>areashadresultedfroma</sup> combination of the following factors. Firstly the livestock had become exhausted due to both **black dzud** (lack of<sup>precipitationwhichleaveslivestock</sup> without any water supply) and **white dzud**<sup>(thesnowfallistoodeepforthe</sup> livestock to reach the grass below), in the wither<sup>of1998-1999,aseveresummer</sup> **drought** in 1999 led to further weakness of<sup>livestock.Thissituationwasfurther</sup> aggravated by poor pasture and lack of hay.<sup>HeavysnowfallinNovemberand</sup>