NDVI pasture insurance
Cover for grassland and rangeland that pays when the satellite Normalized Difference Vegetation Index (NDVI) over an area falls well below its historical average for the same time of year.
NDVI pasture insurance covers grassland and rangeland on a satellite vegetation index, the Normalized Difference Vegetation Index (NDVI). It pays when that index over an area falls well below its historical average for the same time of year. You cannot weigh a pasture. A crop has a yield; grassland grazed down through the season has no reliable production figure at all, and that gap is what pushed carriers toward satellites. NDVI compares near-infrared reflectance (NIR), which green vegetation bounces back strongly, with red reflectance, which it absorbs. The formula is (NIR minus Red) divided by (NIR plus Red), on a scale from minus one to one. It is read on eight- or sixteen-day composites, at 250 meters from MODIS (Moderate Resolution Imaging Spectroradiometer) since 2000 and at coarser resolution from AVHRR (Advanced Very High Resolution Radiometer) since the 1980s. The contract aggregates pixels over a grid cell or zone and accumulates NDVI across the growing season. It compares the total with the historical distribution for the same period and pays below a percentile or a deviation from the mean set in advance. Kenya's IBLI (Index-Based Livestock Insurance) uses NDVI to predict livestock mortality. Pasture cover in the strict sense pays the forage deficit directly and leaves the rancher to decide whether to buy hay, sell stock or move the herd. Modelers know the weak spots. The index saturates over dense vegetation. Clouds punch holes in the series during the rainy season. In arid zones bare soil muddies the signal, and woody brush can stay green while the grass dies. Widespread overgrazing drags the index down with no drought at all. And the series itself ages: the Terra and Aqua satellites drift late in life, and the move to VIIRS (Visible Infrared Imaging Radiometer Suite) means stitching two sensors together without a break. Without that, pricing rests on a history that no longer measures the same thing. Twenty-five years of history at most is also thin for sizing a one-in-a-hundred drought.
In the US, the Department of Agriculture (USDA) piloted Pasture, Rangeland, Forage insurance in 2007 with two indexes to choose from, one built on rainfall, the other on satellite vegetation readings. The vegetation option was dropped from the 2016 crop year, after nine seasons, and the program kept only the rainfall index. That says a lot about how hard it is to get ranchers to accept a number they cannot check for themselves at the fence line.
NDVI index insurance, vegetation index insurance, satellite pasture cover, rangeland index insurance
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