“ No silver bullet”

1. “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)

2. 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

3. 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

4. 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

5. 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!

6. The result... Those not related to others tended to be among both richest and poorest

7. 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’

8. 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)

9. Conceptual framework for PRM

10. The Mongolia case: 1 Index-based livestock insurance Grazing reserves Mobility dzud preparedness/ contingency planning Restocking

11. Why Insurance?

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

13. Expecting a harsh winter again, following severe drought during the 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)

14. Spatial data product example: DEPARTURE FROM AVERAGE VEGETATION INDEX

15. Animals Losses – Bad Years Value Animals

16. Differences in Relative Risk Will Result in Different Premium Rates

17. Pilot Scheme Layers the Risk Disaster Relief Program 100% Mortality 30% Mortality 10% Mortality Base Insurance Product Retained by Herders and Banks

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

19. The Mongolia case: 1 Index-based livestock insurance Grazing reserves Mobility dzud preparedness/ contingency planning Restocking

20. On the move: ◄ otor Bag meeting ►

21. Restocking beneficiaries Bayarsaikhan and his son, Gurvanbulag sum, Bayankhongor; Naranchimeg and Sarav of Zag sum, Bayankhongor August 9, 2000

22. The Mongolia case: 2 National Council on PRM Index-based livestock Insurance Grazing reserves Water point rehab Mobility dzud preparedness/ contingency planning Public awareness Herder groups Restocking

23. 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-aimagotor 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

24. 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

25. The Mongolia case: 3 National Council on PRM Index-based livestock Insurance Microfinance outreach Grazing reserves Water point rehab Value-chain activities? (SLP2) Mobility dzud preparedness/ contingency planning ‘CDD’/basic infrastructure Public awareness Herder groups Restocking

26. 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

27. Microfinance Outreach Key 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