Country Innovation Story | Mongolia: Strengthening Urban Water Management

Strengthening Urban Water Management

By Bulgan, General Director, Department of Green Policy and Strategic Planning, MET; and Mr. L. Erdenbulgan, Head of Water Resources Division, MET on behalf of the MSP members

The Challenge

Mongolia receives only 378 mm of rainfall annually, which is a mere fraction of a global average of 900 mm. The country also has limited surface water sources, making its management a critical aspect in supporting economic activity. The effects of water scarcity are felt exponentially in urban areas where growth is concentrated. This is especially so for Ulaanbaatar, which alone represents about 70 percent of total potable water consumption in the country. Limited treatment of wastewater and low water use efficiency further diminish water availability. Studies by 2030 WRG indicated that the city will likely face a water demand-supply gap by 2030, with industry bearing the brunt1. This will not only hurt companies that depend heavily on water for their businesses, but also the people whose livelihoods are tied to the operations of those companies.

The Solution

In response to this situation, 2030 WRG partnered with Mongolia’s Ministry of Environment and Tourism, the private sector, and civil society stakeholders to initiate a series of integrated regulatory and governance interventions to improve urban water management. Instead of treating urban water management challenges as isolated issues, this series of interventions addressed key bottlenecks throughout the entire water value chain. Until then, there had been no attempts to use such a comprehensive approach to urban water management.

The first phase of work sought to improve urban water management issues through the Water Pollution Fee Law (WPFL). However, successful implementation remained elusive five years after the law was established. This was largely due to an overly complex model for estimating pollution charges, especially within a context of limited technical and implementation capacity. While the private sector supported WPFL in principle, it had serious concerns about its feasibility precisely because of such limitations.

To help the Mongolian government improve the implementation of WPFL, the Mongolia 2030 WRG team shared best practices from relevant countries, highlighting simple water pollution fee models that incorporate economic incentives for pollution reduction and employ a simpler methodology to measure pollution in wastewater discharge. Based on this exercise and extensive analysis of local data to inform applicable charges, a preferred model was identified and contextualized for Ulaanbaatar. Once agreed with the private sector, the model was embedded in a revised license and discharge permit for water use and wastewater discharge. This model would be applicable to all consumers in the city.

The second phase of work addressed the issue of low water use efficiency. While potential reuse of treated wastewater in large industry and power plants in Ulaanbaatar was recognized as an effective means of optimizing freshwater use, the lack of standards to support reuse had been a hurdle in implementation. Working closely with the Ulaanbaatar Mayor’s office—and drawing upon established international practice—appropriate standards were proposed for large industrial water users that can potentially reduce their freshwater consumption by using treated wastewater. It is expected that the adoption of the WPFL will further promote the practice of water reuse among large water users such as power plants and beverage companies. It will also encourage them to treat wastewater on site for supply to willing off-takers, thereby avoiding not only network discharge fees, but also pollution fees. To complement the wastewater reuse measures, sector stakeholders have recently initiated a review of water tariffs, which is a key regulatory instrument to incentivize wastewater reuse and promote the judicious use of freshwater.

Progress to Date

The revised WPFL, which incorporates the proposed fee model, has been approved by a working group of Mongolia’s national cabinet. Adoption is expected to avoid discharge of over 61.2 million cubic meters of inadequately treated effluent into the Tuul river annually. Meanwhile, it has catalyzed innovation in small-scale onsite wastewater treatment systems. A model of institutional settings and engineering solutions that enables normal operation of wastewater treatment that is contextualized to Mongolia’s conditions is currently being piloted in the market. 

The Mongolian Agency for Standard and Metrology approved the “National Standards for Treated Wastewater Reuse” in June 2018, paving the way for the offtake of 50 million liters of treated wastewater daily from Ulaanbaatar’s central wastewater treatment facility, including wastewater from two nearby power plants. An investment of approximately US$300 million is planned for the development of infrastructure that will enable the reuse of wastewater for power plants.

Key Lessons

  • Adapting regulatory and governance instruments to locally relevant conditions can remove hurdles for the effective implementation of legislation and institutional systems necessary for effective urban water management. 
  • Alignment of incentives and a clear demonstration of impacts are key to driving implementation. 
  • Inclusive dialogue that involves the government at all relevant levels, the private sector, and civil society representatives are necessary for forging consensus on difficult and complex issues like building institutions and policies for effective urban water management.