Index-Based Livestock Insurance Programme (IBLIP) — Dzud & Drought Payouts for Mongolian Herders

Dzud — a compound climate disaster combining summer drought with catastrophic winter cold and snow — periodically kills millions of livestock across Mongolia's rangelands. Starting with a 2005-2006 pilot in three (later four) aimags (provinces), the Government of Mongolia worked with the World Bank to design the Index-Based Livestock Insurance Programme (IBLIP): payouts are triggered automatically once an independently measured district-level livestock mortality rate crosses a 6% threshold, removing the need for costly farm-by-farm loss verification and cutting payout delays.

The programme was institutionalized as a permanent national scheme in 2014. A peer-reviewed hazard-return-interval study (Rao et al., Natural Hazards and Earth System Sciences, 2022) has since used the same mortality-index approach to characterize how climate change is altering the frequency of dzud-triggering conditions, reinforcing the index's ecological grounding.

By the 2009-2010 dzud season, all 2,117 herders who held eligible policies received indemnity payments, and policy sales grew year on year in the founding aimags, surpassing 14,000 policies sold as herder confidence in the product grew.

Because payouts arrive before herders are forced into distress destocking or emergency overgrazing of drought-stressed pasture, the scheme is credited by its designers with an indirect rangeland-protection effect, though this pathway has not been directly measured with pasture-condition data specific to Mongolia; the mechanism is a financial-risk instrument rather than a direct ecosystem intervention, so its ecological evidence base remains considerably thinner than its financial-uptake evidence.