Water Demand Management in Mongolia

Mongolia’s growing water demand requires effective policies and governance mechanisms to prevent over-abstraction and ensure sustainable resource use. Water demand management strategies rely on a mix of economic instruments, allocation regimes, and water-efficient technologies to balance consumption across sectors. While Mongolia has introduced a robust system of pollution and water-use fees, further refinements can be made to enhance fee collection efficiency, ensure that all water users contribute appropriately, and establish a stronger enforcement system.

Water allocation regimes must also be reinforced, particularly in water-stressed basins and aquifers. A national framework of water allocation principles, integrated in the national IWRM plan and basin management plans, can ensure fair and sustainable water allocation. This framework typically includes long-term and short-term abstraction limits, water permitting systems, and prioritisation of water uses during periods of stress. Investments in storage, treatment, and water delivery infrastructure will further enhance water security.

Strengthening institutional governance will improve water management outcomes. Enhancing the role of the National Water Council, ensuring greater coordination across agencies, and transferring a portion of water-use fees to local river basin authorities will support better decision-making and financial sustainability. Furthermore, promoting public-private collaboration and government-to-government partnerships, for instance through water cooperation agreements or contracts on specific topic areas such as monitoring and enforcement, can enhance groundwater and surface water management.

Water quality improvements are equally important. Industrial pollution remains a concern, and Best Available Techniques (BAT) for industrial wastewater treatment could be introduced, particularly in sectors such as textile manufacturing and meat processing. Promoting wastewater reuse through appropriate legal and regulatory frameworks can help alleviate pressure on freshwater resources, particularly in areas where demand is high.

Ensuring long-term water security requires substantial investment in water supply, sanitation, and climate-resilient infrastructure. Achieving the ambitious targets outlined in Vision 2050 and the New Recovery Policy demands strategic investment planning, improved cost recovery mechanisms, and expanded private sector engagement. However, several challenges remain, including limited resources for feasibility studies, fragmented planning, and competing funding priorities.

Strengthening investment planning will require centralising funding for feasibility studies, ensuring that projects are sequenced effectively within broader investment pathways, and integrating decentralised and climate-resilient infrastructure solutions. Enhancing cross-sectoral coordination—for example, through platforms such as the National Water Council—can further improve the coherence of investment planning.

The financial performance of water service providers is another critical issue. Current inefficiencies, including water losses and high operational costs, present an opportunity for reform. Improving financial sustainability will require expanding the use of metering for accurate billing, and rationalising staffing levels—particularly in urban areas where inefficiencies are most pronounced. Service providers should also be required to develop sustainable business plans with clear financial and operational targets. Expanding the role of the Water Service Regulatory Commission (WSRC) in reviewing utility business plans, tariff structures, and cost-recovery mechanisms can help ensure a more stable financial model for water service providers. A tiered tariff system—combined with targeted subsidies for low-income households—could help balance financial viability with social affordability.

Private sector engagement will be crucial in bridging the water sector’s financing gap. However, several barriers remain, including unclear investment opportunities, lack of regulatory clarity, and limited private sector awareness of financing mechanisms. Public-Private Partnerships (PPPs) hold promise, particularly in wastewater treatment and reuse, but additional policy support is needed to encourage investment. The government can strengthen private sector engagement by clarifying technology standards for pollution control, improving data transparency and accessibility, expanding sustainable finance initiatives, and developing clearer PPP guidelines for wastewater reuse projects.

Reliable hydrological monitoring and water information systems are essential for effective decision-making and climate adaptation. However, Mongolia’s current monitoring network is outdated and lacks sufficient coverage, limiting the ability to track water availability and predict risks. Modernising and expanding the hydrological monitoring system, integrating ICT-based data management tools, and improving data quality control are critical steps towards a more efficient and resilient water management framework.

A national integrated water information system would provide a centralised platform for collecting, processing, and disseminating hydrological data, facilitating coordination among government agencies, research institutions, and water service providers. Additionally, the establishment of a national flood forecasting and warning system using advanced technology could reduce the economic and environmental risks associated with extreme weather events.

Capacity building is also a key component of strengthening water governance. A National Water Environment Education Centre could serve as a hub for training water professionals and developing expertise in hydrological management. A long-term roadmap for capacity-building should be implemented to ensure sustained knowledge transfer and technical capability development.