The improved implementation of the Mongolian law on natural resources use payment has tripled the country's environmental expenditure

The UNDP Biodiversity Finance Initiative (BIOFIN) has supported Mongolia in improving the effectiveness of a law on natural resource user fees. This led to an increase in the budget for environmental protection including biodiversity conservation. In 2023, revenues from the Natural Resource Use Payment Law (NRUP Law) reached US$ 11.9 million, a 170% increase compared to the recent average (2016-2021). Projections for 2024 indicate an even higher increase - US$22.4 million.

Biodiversity is under threat

Biodiversity is under acute threat in Mongolia, a country with vast landscapes and diverse ecosystems harboring unique flora and fauna. Factors such as agricultural expansion, mining, infrastructure development and climate change are the main causes of biodiversity loss. Overgrazing and climate change have taken a particularly heavy toll on Mongolian soils - 77% of soil is degraded to some degree, leading to a decrease in soil fertility, desertification and a decline in biomass and biodiversity. Illegal wildlife trade and poaching have also threatened species like the marmot, snow leopard, red deer and wild sheep. However, thanks to conservation efforts, the numbers of not only the above-mentioned mammals, but also the wild horse, Mongolian saiga, gobi bear and wild donkey are steadily increasing.

^{The number of livestock in Mongolia, the main contributor to biodiversity loss, increased to 71.1 million in 2022. Due to the rapid increase of livestock and climate change, 77% of Mongolia’s land has been affected by desertification}. 

Biodiversity needs funding

These challenges are exacerbated because of limited funding for biodiversity conservation and a lack of integration of conservation into several major policies. Only a tiny fraction of Mongolia's national budget - around 0.2% of GDP - is allocated to this important task. The Mongolian government has committed to increasing spending on environmental protection to at least 1% of GDP, signaling a promising shift towards a nature-positive society.

At the forefront of these efforts is the UNDP's Biodiversity Finance Initiative, which aims to mobilize both public and private funding for biodiversity conservation and related climate action.

Release of funds through the NRUP law

One of the most important initiatives in Mongolia is the enforcement of the Natural Resource Use Payment Law (NRUP Law), which aims to channel revenues from natural resource use payments into environmental protection and natural resource rehabilitation. It was estimated that the successful enforcement and effective implementation of the law would generate an additional US$ 6 million per year for environmental protection. The law's performance in 2023 and the approved budget for 2024 exceeded expectations and has the potential to generate more than US$15 million annually — more than enough to close Mongolia's current biodiversity funding gap of US$10 million per year.

BIOFIN’s support to increase the effectiveness of the NRUP law

BIOFIN is playing a crucial role in increasing the effectiveness of the NRUP Law by improving transparency and strengthening local environmental financing mechanisms through:

1.         Revision of regulations: a gap analysis of the fiscal regulations and institutional framework for the implementation of the NRUP Law, followed by the development of a revised regulation with technical assistance from the BIOFIN team, has paved the way for the early implementation of the law.

2.         Establishment of a public database for environmental budgets and expenditures: Access to revenue and expenditure budgets ensures accountability and transparency in environmental planning and budgeting.

3.         Nationwide capacity-building and awareness-raising initiatives: Comprehensive training organized by the BIOFIN project in all 21 provinces and the capital of Mongolia since 2022 provides local actors with the knowledge and skills needed for effective environmental management.

^{UNDP BIOFIN organized workshops in 21 provinces of Mongolia to improve the skills of local actors in environmental management.}

4.         Development of an expenditure taxonomy: Standardizing the categorization of environmental expenditure facilitates clarity and consistency in budget reporting.

5.         Revising the NRUP Law: aligning the law with environmental protection priorities optimizes the use of natural resource use payments for biodiversity conservation.

Tangible results: transformative impact of the financial solution

The results of these efforts are already tangible. Total spending on environmental protection from NRUP revenues increased by 170% in 2023 compared to the previous state average, reaching US$11.92 million. It is expected to increase further to US$ 22.43 million by 2024.

Figure. Total environmental expenditure and its predicted increase for the financial year 2024

^{2023 - result based on the report from the Ministry of Environment and Tourism}

^{2024* - environmental budget according to the approved Local Budgets}

Strengthening nature conservation through NRUP revenues: Stories of impact

In addition to the numbers and statistics, there are also real stories of impact. In the province of Bayan-Ulgii, revenues from natural resource use payments, particularly from wildlife hunting, have been instrumental in funding conservation efforts. Juldyz, a biodiversity specialist, reports how these efforts have led to a significant rebound in the population of wild goats — a testament to the effectiveness of conservation efforts. "It gives me great pleasure to observe these animals and their growth. Wildlife conservation is of utmost importance and when we protect wildlife, we see them thrive," says Juldyz.

 ^{The population of wild goats has increased in the recent years due to conservation measures.}

^{From left Tserennyam, Project Coordinator of BIOFIN II project, and Juldyz, Biodiversity Specialist of Environmental Unit, Bayan-Ulgii province.}

Looking to the future

Looking ahead, the successful nationwide implementation of the NRUP law will provide a major boost to Mongolia's biodiversity conservation efforts and will empower local governments and communities. BIOFIN will continue to support this endeavor with technical assistance and advocacy to ensure the effective implementation of the law.

Mongolia is on the way to a sustainable future. Biodiversity conservation is a testament to the country's unwavering commitment to environmental protection - a legacy that transcends generations and borders.