Millennium Challenge Corporation (MCC) requested Adam Smith International (ASI) to conduct a political economy analysis for its second upcoming Mongolia compact programme focused on increasing urban water supply In Ulaanbaatar. As part of its £350 million compact programme, MCC wanted to invest in additional water supply well-fields and build a wastewater treatment plant. For this programme, the current structure and price of water and wastewater tariffs in Ulaanbaatar is a risk to sustainability.

To ensure the MCC project objectives are achieved and its investments are operated and maintained in the future, ASI developed an analysis of the Mongolian context and reviewed the underlying incentives and stakeholder dynamics of the water and wastewater sector in Ulaanbaatar. The project team (which consisted of 75% local experts) engaged over 60 stakeholders from across the national and municipal governments, regulators, utilities, development agencies and the private sector, as well as conducting a water consumer survey among apartment dwellers in Ulaanbaatar.

The main deliverable was a comprehensive stakeholder mapping of the key stakeholders in the sector. To identify bottlenecks to sector sustainability, the team reviewed the existing policies, legislation and institutional structures in the urban water supply and wastewater services sector.

Project Achievements

• Strengthened MCC’s understanding on water and wastewater tariff reform in Ulaanbaatar helping their approach to the second Mongolia compact to be agreed in early 2018.
• Our recommendations paved the way forward to help build consensus and support for the objectives of MCC’s investments across water infrastructure in Mongolia