A market economy dictates that user fees for any resource use serve a good economic mechanism to prevent overuse. Pastures in Mongolia are used free of any fees. The policy may seem favorable for herders at first, but in fact it encourages the misuse of pastures, thus contradicts the long term interest for securing herders’ livelihoods by ensuring sustainable livestock sector development.


In this regard the questions how herders would respond to grazing fees, is it possible to design a grazing fee system that is acceptable to herders, what principles should underline such a system intrigue a lot.


The answer to these questions would open a door to achieving the policy targets in the Parliament-approved “Mongolian Livestock” program, the draft pasture law and draft amendments to the land law aimed at introducing economic mechanisms for regulating the pasture use.


World Bank supported Sustainable Livelihoods Project (SLP)-II has piloted a proxy-grazing fee system in four soums representing main ecological regions of Mongolia – Mankhan soum of Khovd aimag for the high mountain region, Undur-Ulaan soum of Arkhangai aimag for the forest-steppe region, Tumentsogt soum of Sukhbaatar aimag for the steppe region, and Khuvsgul soum of Dornogobi aimag for the Gobi region for the period from February to August 2011.


The pilot was based on the following principles:

1.      Given the absence of legal environment for grazing fee, design a proxy fee system that is similar to a desirable grazing fee system in Mongolia in terms of economic impacts on herders, ways to estimate fees and collect revenues, and disburse revenues

2.      Be affordable, easily estimated and understood by local people

3.      Spend most revenues back on pastureland and risk management with both herders and local governments being beneficiaries

4.      In addition to herders as users, local governments as owners of pastures should contribute and their contributions should be funded from the project during the pilot period

5.      Herders should pay grazing fee on a voluntary basis

6.      Ensure the herders’ and local governments’ participation in the pilot design and implementation by building well awareness among them

7.      Involve key ecological regions of Mongolia

8.      Ensure transparency and openness


The principle No 1 was applied through establishing a soum “Livestock Risk Management Fund” (LRMF) where herders pay contributions to (grazing fee proxy). The fund rules were discussed and approved by soum Hurals of Citizens’ Representatives.


The principle No 2 was applied using the livestock numbers for each khot ail and herders’ group based on the official animal census for 2010 and introducing grazing fee at the level of MNT 100 per sheep unit. Animal numbers were converted into sheep units using the coefficients based on grazing consumption but modified in consideration of damages animal species bring to pastures. The coefficients were 1 for sheep, 2 for goat, 3 for camel, 4 for cattle, and 8 for horse. Herders were entitled to pay their contributions to LRMF for absentee herds either getting contributions from owners or paying them on behalf of owners.


The principles No 3 and 4 were applied through first, LRMF is composed of herders contributions for 40% and project funding for 60% which is hoped to be eventually replaced by local budget, second, by paying contributions herders are entitled to get funding from LRMF in the amount the contributions paid augmented by 75% for the purposes of financing annual pastureland and risk management activities specified in a list, third, local governments are entitled to spend the remaining 30% of LRMF on common soum and bag level pastureland and risk management activities using bottom-up and participatory planning approach supported by SLP-II. For example, assuming that herders’ contributions make up MNT 10 m (40% of LRMF), the project pays MNT 15 m (60% of LRMF) with the fund totaling MNT 25m.   Herders will get back MNT 17 m – MNT 10 m as their initial contributions plus MNT 7.5 m as 75% augmentation of their contributions. The remaining 30% or MNT 7.5 m is disbursed by soum governments.


List of annual pastureland and risk management activities includes:

1.      Repair animal shelter

2.      Build or repair shed for calves and lambs

3.      Repair small storage for fodder and grass

4.      Reserve manure

5.      Make small scale snow breaker

6.      Prepare animal fodder and salt marsh

7.      Fence and protect springs

8.      Establish hand wells

9.      Clean wells

10.  Restore well enclosure, head and trough

11.  Restore pump and generator of deep wells

12.  Carry out activity for combating pasture rodents

13.  Restore water reservoir

14.  Plant fruit and other trees near wells

15.  Prepare seeds of perennials and improve grassland and hay fields

16.  Make animal coverlets and under-covers

17.  Restore hay field fencing

18.  Fertilize hay fields with manure

19.  Build inter-group fodder point

The principle No 6 was applied by organizing training for local government officials in Ulaanbaatar city and soums and on-site face-to-face training and awareness building activities among herder households both by consultant experts and local trainers.


The principle No 8 was applied by first, establishing a special account for LRMF at the soum KHAAN bank branch and herders paying their contributions to the bank account for the period from 10 April to 1 August 2011, secondmaking herders entitled to get funding from LRMF after filling in a special project proposal form and getting it reviewed by soum project staff and making all transactions through bank account, third, entitling herders for getting 80% of funding upon paying their contributions and establishing an agreement between them and local governments for each project proposal and paying the remaining 20% after projects implemented to the bank accounts of herders, fourth, reporting on the fund revenue collection and disbursement regularly to supervising organizations.


As of August 2011 soum LRMFs were paid MNT 21.4 m for 214000 sheep units in the Mankhan soum, MNT 12.5 m for 125000 sheep units in the Undur-Ulaan soum, MNT 7.5 m for 75000 sheep units in the Tuvshinshiree soum, and MNT 9.8 m for 98000 sheep units in the Huvsgul soum. The fund revenues are being used for financing pastureland and risk management activities according to approved rules under the project supervision.


Based on the above one can make a conclusion that it is feasible to design and implement a herder-friendly grazing fee system in Mongolia.


The introduction of grazing fee system will provide essential economic mechanisms for implementing the “Mongolia Livestock” program and enforcing key provisions of the land law and the draft pastureland law. It will also address the following pressing issues of livestock sector development in Mongolia:

1.      Provide economic incentives and a funding source for promoting sustainable use of pasture resources and mitigating livestock risks through adequate planning

2.       Establish accountability mechanisms to address human-induced pastureland degradation resulting from overgrazing and chaotic use of pastures

3.       Replace the existing ineffective system of risk and disaster management where herders ask for assistance from the government and the latter for international donors and aid funds are used in inefficient ways by an in-advance planned and adequately funded system

4.           Provide a model for fiscal decentralization through increased participation of local governments and herders


The piloted system can be further improved by introducing differentiated fee system based on factors like pastureland quality, location, and the degree of overgrazing and encouraging group or community responsibility with affordable privileges for the poor.