|No. 8/2009: LIVESTOCK AS
INSURANCE AND SOCIAL STATUS. EVIDENCE FROM REINDEER HERDING IN NORWAY.
Anne Borge Johannesen and Anders Skonhoft
The theory of livestock as a buffer stock predicts that agropastoralists
facing substantial risks typically will use liquid assets, such as
livestock, for self-insurance to smooth consumption. This paper examines
this hypothesis for reindeer herders in Norway where the herders, in
contrast to pastoralists in, say, Sub-Saharan Africa, face well
functioning credit markets. Using survey data including slaughtering
responses to a hypothetical meat price increase, we test whether keeping
reindeer as insurance against risks affects the slaughter response.
Furthermore, we study whether status motives for keeping large herds
affect the harvest response to a changing slaughter price. As a
background for the empirical analysis, a stochastic bioeconomic model
describing Saami reindeer herding is formulated.