ECONOMIC ANALYSIS OF

NEGATIVE IMPACTS OF GOAT

GRAZING TO ENVIRONMENT IN
MONGOLIA
A policy research paper

Erdenesaikhan Naidansuren
Onon Bayasgalan

Environment and Security Center of Mongolia NGO

Suite #123, Government House III
Baga Toiruu- 44 SB District
Ulaanbaatar Mongolia
erdene@environ.mn
 TABLE OF CONTENTS

EXECUTIVE SUMMARY 6
1.0 INTRODUCTION 7
1.1 Main issue
1.2 Research objectives
1.3 Research sites
1.4 Literature review

2.0 PASTURELAND USE 11

2.1 Causes of overgrazing
2.2 Overview of land degradation
2.3 Identifying the pasture carrying capacity
2.4 Environmental impact of goats

3.0 LOCAL SURVEY RESULTS 18

3.1 Research site demographics
3.2 Methodology
3.3 Result

4.0 LEGISLATIVE FRAMEWORK ON PASTURE USE 21

4.1 Traditional pasture regimes
4.2 Current laws and policies pertaining to herders

5.0 POLICY OPTIONS 25

5.1 Option 1: Community pasture management (CPM)
5.2 Option 2: Application of fees on pasture utilization (FPU)
5.3 Option 3: Re-application of herder income tax (IT)
5.4 Option 4: Grazing quota for herders (GQ)
5.5 Option 5: No policy (NP)

6.0 COST ANALYSIS 30

6.1 Methodology
6.2 Flock circulation
6.3 Measuring the costs
6.4 Breakdown of the policy options
6.5 Policy Costs
6.6 Criteria selection for policy options

7.0 CONCLUSION 45
8.0 RECOMMENDATIONS 46
BIBLIOGRAPHY 48
APPENDICES 49

2
 LIST OF TABLES

Table 1. Pasture status in project counties (NLA)

Table 2. Pasture Carrying Capacity in the Eight Counties
Table 3. Total livestock owned by the surveyed herding families (2008 census data)
Table 4. Total goats owned by the surveyed herding families (2008 census data)
Table 5. Baseline data for all policy options
Table 6. Livestock reduction levels
Table 7. Flock circulation calculation scheme of goats
Table 8. Comparison of the positive and normative values of the livestock
Table 9. Breakdown of the policy options
Table 10. Average annual policy expenses
Table 11. Selection criteria for policy options
Table 12. Criteria points of the policy options

3
 LIST OF FIGURES

Figure 1. Project sites

Figure 2. Uvurhangai province
Figure 3. Bayanhongor province
Figure 4. Livestock size increase in the eight counties
Figure 5. Annual average livestock growth rate
Figure 6. Goat population growth rate
Figure 7. Respondents’ ideas for sustainable pasture management
Figure 8. Policy problems that are related to pasture deterioration
Figure 9. Livestock reduction rate
Figure 10. Livestock reduction rate incorporating the 2009-2010 dzud
Figure 11. Policy calculation steps
Figure 12. Costs of the policy options

4
 EXECUTIVE SUMMARY

Mongolia’s pastureland has seen rapid rates of degradation in the past two decades
because of climate change and inappropriate grazing patterns. With such levels of
pastoral degradation, the following entities are being negatively affected: herders, the
livestock sector, the economy, the jobs sector, the nomadic cultural heritage, and
Mongolia’s biodiversity. This report’s foremost objective is to propose policy options
that make the pastures of Mongolia sustainable in the long-term, and to slow down the
process of desertification, which has thus far afflicted 72 percent of Mongolia (SDC
2009). Because the pastureland of Mongolia is a common access resource, herders do not
behave in an environmentally sustainable way. The net effect of over 40 million livestock
owned by approximately two hundred thousand herding families in a vast, fenceless
landscape is tremendous. However, this very complex issue not only incorporates herders
and government institutions, but also the country’s overall mindset towards livestock
husbandry.

This report is comprised of an economic analysis that focuses on the negative impact of
goats, which have the largest impact on pasture quality among the five livestock types.
The absence of regulations and the inadequacy of pertinent laws and government policies
have stemmed this national crisis. Consequently, this report proposes three policy options
addressing this problem. Although some of these solutions are already recognized in the
legal framework, none are enforced for reasons that will be explained further in the report.
These three policy proposals aim to reduce grazing effort, and to introduce enterprises
that improve the productivity of the livestock. In all of the three policy options we have a
livestock population target, and we determine how much it costs for each policy option to
reach this target.

In order to highlight the economic significance of the impact of the livestock on pasture
sustainability, we determine the pure economic value of goats, sheep and horses.
Calculating the pure economic value of livestock is a new concept for Mongolian
agriculturalists and economists alike. Our suprising findings show that goats are not
worth the favored value that herders place on them. Goats are in effect the least
economically valuable animal, especially if one recognizes the unequal distribution of
product markets and manufacturers of the goods of the other livestock animals.
Mongolians primarily drink imported milk despite its ample domestic supply. Mongolia
does not use its competitive advantage in the meat market because the slaughtering
system do not qualify for international trade. Herders are also not experienced in
processing their products; they mainly know only how to sell them as raw materials. The
key underlying theme behind each of the policy options is to develop the market for wool,
milk, meat and hide so that the productivity of each animal is multiplied, hence reducing
the need to concentrate on livestock population. Subsequently, this report recommends
the most optimal of these options as a solution to achieving sustainable pastures.

This research was financed and managed by the Environment and Economics Program
for South East Asia (EEPSEA) and the authors are acknowledge and very grateful to

5
Hermi Francisco (PhD) and Ted Horbulyk (PhD) for their valuable contribution for this
report.

1.0 INTRODUCTION
1.1 MAIN ISSUE

Eighty percent of Mongolian land is a common access resource, and the two hundred
thousand herding households of Mongolia use ninety percent of this land as pastureland
(Zagdarsuren 95). The forerunning issue of Mongolia today presides in the vast pastures
of Mongolia that are seeing dangerous levels of degradation due to the absence of a
successfully enforced sustainable pasture management system. The main issue is the lack
of effective coordination and regulations in the management of pastureland. Bad pastures
have a direct impact on the lives of herders; it can strip entire families from its sole
source of income by killing off all their livestock. Bad pastures also affect the entire
Mongolian population through fluctuating prices of livestock products, and through
heightened economic pressure from suffering herder families. Although the main cause of
land degradation, the spread of desertification and biodiversity is claimed to be climate
change (64.1%), overgrazing and overpopulation of livestock also play an enormous role
(35%) in the destruction of pastures. Climate change is mainly caused by human
activities, thus there is no knowing how much of a role Mongolians have played in
speeding up global climate change.

1.2 RESEARCH OBJECTIVES

Main Objective:

To generate policy options that improve the quality of pastureland by means of reducing
the negative impacts of goat grazing, sheep grazing and horse grazing in Mongolia.

The following tasks will guide us to the best policy options:

A. Identifying the current situation of pasture degradation in the project

area with a focus on the impact of livestock.
B. Developing policy options for alleviating pasture degradation with the
help of community surveys and research of the legal framework
surrounding the degradation problem.
C. Estimating the costs of these policies and comparing their impact on
the local community and the pastureland.

1.3 RESEARCH SITES

Mongolia is administratively divided into 21 provinces, which has an average population

of 75,000 excluding the capital city of Ulaanbaatar. Each province has between 14 and 27
counties (also referred to as soums). In this project, eight counties from Uvurhangai and

6
Bayanhongor provinces were selected for further study. Uvurhangai and Bayanhongor
provinces are among the provinces that have the highest goat population density. These
provinces are located in between the Khangai and Eastern Altai Mountain ranges. They
are about 400- 800 km to the south-west of Ulaanbaatar city. The counties are
Bayanundur, Sant, Hujirt and Hairhandulaan counties in Uvurkhangai province and Ulziit,
Jinst, Bogd and Bayanlig counties in Bayanhongor province. Below you can see the eight
counties in the context of the entire nation. These counties are located in different natural
zones of Mongolia, such being the mountain forest steppe (Ulziit, Hujirt), the dry steppe
(Hairhandulaan, Bayanundur and Sant), and the Gobi desert zones (Jinst, Bogd,
Bayanlig).

Figure 1: Project sites

7
Figure 2. Uvurhangai province

Figure 3. Bayanhongor province

1.3.1 Climate and Weather

The project area is located in the Northern semi arid zones of the Altai mountain range of
Central Asia. The altitude of these provinces ranges between 1000 to 4000 meters above
sea level. The climate is continental and displays extreme temperature fluctuations. The

8
annual average air temperature ranges between -1 and +4 degrees. During the cold season
(December – February) the temperature ranges from 18-30 degrees below zero, whereas
in the summertime (May- August), it ranges from 15 degrees to 30 degrees above zero.
The annual precipitation is 200-325 mm in the northern forest and mountainous region
and 50-100mm in the Gobi desert region.

1.3.2 Social data

These counties are representative of the typical characteristics of the Mongolian rural
population. Table 1 in the appendix section, shows that most of the households (73-86%)
live in remote areas, and are herding livestock.

1.3.3 Native plant and animal species

Bayanhongor and Uvurhangai provinces reside side by side with Bayanhongor province
in the western and Uvurhangai province in the eastern side. They both contain a mixture
of dry and desert steppe to the south and mountainous forest steppe bordering the two
mountain ranges. Uvurhangai province is well-known for its waterfall called Ulaan
Tsutgalan, which has begun to dry up frequently during the summers.

Bayanhongor province contains many medical plants, such as the desert cistanche,
licorice, roseroot, agriophyllum pungens, snow lotus, sand rise, and sphallerocarpus. It
also has marmots, foxes, wolves, corsac foxes, badgers, lynxes, leopards, ibexes, goitered
gazelles, white-tailed gazelles and antelopes. Some of the desert regions have wild horses,
wild donkies, wild camels, wild boars, and the Gobi bear, all of which are considered rare
species.

Uvurhangai province contains, wild sheep, ibexes, wild horses and camels, goitered and
white-tailed gazelles, foxes, lynxes and leopards. In terms of bird life, it has swans,
pelicans, snow cocks, black grouse, partridge, and snow grouse.

Overgrazing of pastures and competition for water resources has affected all of the
mentioned flora and fauna. Livestock is beginning to take over the habitats of the wild
animals and to graze on the medicinal plants severely. Livestock also compete for water
with all of the bird species that are becoming fewer each migrating season. Thus, the
native plants and animal species in these two provinces are special areas of concern.
Protecting these species is critical because they preserve the biodiversity of the land,
which is also critical to the sustainability of the pastures.

1.3.4 Economic activity

The main economic activity in these counties is livestock husbandry. The semi-arid
nature of the land and the sparse vegetation and limited precipitation in this part of
Central Asia is suited for pastoral livestock production. Crop and vegetable farming does
exist, though its contribution to the local economy is insignificant.

9
Since pasture is an open access resource, herders do not possess any property assets.
Output per head of livestock is small because of the low productivity of grasslands in a
semi-arid region. Consequently, herders have a high interest in increasing their livestock
sizes.

1.4 LITERATURE REVIEW

The book entitled “Goat herd: the most pressing ecological and economic issues” is a
very comprehensive book that is representative of the general opinions and field of
studies that Mongolian scientists carry out with regard to goats and livestock grazing.
This book contains a compilation of 11 important studies conducted by 23 of the
livestock experts in Mongolia. Because Mongolia has a population of only 2.7 million
people, the studies of this handful of scientists are very representative of the scope of
studies carried out in the entire nation.

Scientists A.Bakei, P.Badarch, and B.Binyee’s report “Development Trends of the Goat
Industry” covers the most important issues surrounding the goat industry. This report
gives statistics on the population of livestock and its growth trends in the past two
decades. The report has highly critical content regarding the flaws of the public policies
that pertain to herders. They also include statistics on the production and export rates of
cashmere in Mongolia. Their policy recommendations were very sound, and included the
central idea of improving the productivity of livestock products. Their sources include
other Mongolian scientists, the National Statistics Office, and the 2005 Millennium
Ecosystem Report of UNEP.

The paper entitled “The Pasture Use of Goat Herds, and Various Ecological Issues”,
composed by scientists S.Tserendash, N.Erdenetsogt and L.Narantuya, were specifically
helpful for this report with regard to the behavior pattern of goats. Their experiments
illuminated the disparities in the eating habits and eating preferences of goats and sheep.
Their collected data gives evidence that goats have the most harmful impact on
pastureland. They are strong proponents of the pasture use fee policy in addition to strict
enforcement of livestock ratios.

The recommendations offered by D.Dungu and G. Bayarsaikhan in “Improving the

productivity and reproductive quality of goats”, point towards the development of goat
breeding mechanisms that offer the best cashmere quality. Their complex matrices
connecting the different goat breeds will be very useful for people operating breeding
centers.

2.0 PASTURELAND USE

Currently, 72.3 percent of Mongolian land is undergoing the process of desertification,
and the pasture capacity is being exceeded by a margin of 32.5 percent or by sixteen
million sheep equivalent units (SDC 2009).

10
2.1 CAUSES OF OVERGRAZING

In order to identify the main causes of pasture degradation in the project area, we used a
primary source and a secondary source. First, we conducted a survey among local
herding communities asking them about their opinions and feelings concerning local
environmental problems, their root causes, their effects, and possible measures that can
be taken to alleviate the land from further deterioration. Secondly, we reviewed
agricultural and environmental government, NGO and scientific reports, and also looked
at satellites images of desertification to gather information on the rate of desertification
and land degradation in Mongolia.

Current pasture management systems are unsustainable for the following reasons: rapid
herd size population growth, the weaknesses in policies and regulations, the lack of
institutional and governmental support, weaknesses in the Land Law, and the global
demand for cashmere.

Mongolian land systems have been in flux this past century, and herders have had to
adjust to a lot of administrative changes. The differences between past and present land
laws help clarify the legislative weaknesses that have intensified unsustainable pasture
management. The Mongolian Constitution, the Civil Code and the Land Law govern the
entire legal framework for land tenure issues. Although residential land became
privatized, pastureland has never been considered private property.

Under the centralized communist regime which lasted from the forties to the beginning of
1990, the state owned all livestock, which was steadily controlled at around 25 million
heads. When Mongolia transitioned into a market economy in the early nineties, the
economy was hit very hard by the withdrawal of Soviet participation. Many people were
left jobless and given few job alternatives, one of which was livestock husbandry.
Livestock husbandry was a popular option because the state began to distribute livestock
as private property to willing herders in the 1990s. Herder numbers increased a little over
threefold between 1986 and 1990 alone from 123.5 thousand to 417.7 thousand
(Dorligsuren, 2006). Livestock numbers have persistently risen from 25 million up to
43.3 million by the year 2008 (Bakei 2009). This transition was completely revolutionary
in Mongolia because the livestock sector was left without any form of regulation
whatsoever.

In 1989, the sheep to goat ratio was 3:1, but by 2008, the sheep to goat ratio had become
1:1. (The significance of maintaining a 3:1 sheep to goat ratio is explained on page
seventeen of this report). Between 1989 and 2008, the number of goats multiplied by four,
the number of camels halved, and the number of cows reduced by ten percent (Bakei
2009). The amount of cashmere production tripled between 1990 and 2008 (Bakei 2009).
Despite the extreme livestock population rise, herders are constantly struggling for
subsistence. Herders are vulnerable to many risks, for which they receive no formal
preventative assistance, but various forms of disaster relief. The harsh winters of 2000-
2002 killed eight million livestock and left thousands of herders without any source of

11
income. Seven years have passed since this disaster, and the government and herders
have done very little to safeguard their livestock from being vulnerable to future blizzards.
Again, in the winter of 2009-2010, Mongolia lost over 8.4 million livestock according to
the statistics of the National Emergency Management Agency.

The following graph shows the livestock increase in five out of the eight soums.

Figure 4. Livestock size increase in the five counties

Compared to 2004, the total sum of livestock numbers of these counties has increased
twofold with an average growth rate of 1.19 percent. However, the 2009-2010 dzud
reduced these livestock sizes to below 2004 levels. The livestock figures above show that
the counties have generally had similar growth trends, which imply that they are affected
by similar forces.

12
 Anual growth rate of livestock of 6 counties in last 6 years

1.60
1.40
2003/2004
1.20
1.00 2004/2005
0.80 2005/2006
0.60 2006/2007
0.40
2007/2008
0.20
0.00

X dulaan

Jinst

growth of
livestock
Bayanunder

Bayanlig

Bogd
Sant

Hujirt

Ulziit

Average
Figure 5. Annual average livestock growth rate

2.2 OVERVIEW OF LAND DEGRADATION

The National Land Authority (NLA) defines land quality based on the following
characteristics:

• Thickness of nutrient layers

• Humus content
• Soil pollution and contamination
• Land surface change
• Plant yield, plant cover change
• Plant species composition and change

Thus, bad pasture means that most of the characteristics above are not in very good
condition. According to the Land law, land quality assessments should take place very
five years in each county. The most recent assessment took place in 2008; however, the
previous one had taken place in 2001. The project team worked together with land
assessment researchers to finalize the latest assessment reports of these counties in May
and June of 2009.

Table 1 shows that a majority of the counties in the two provinces have severely
degraded lands. Uvurhangai has a higher level of pasture degradation, which ranges from
45.2 percent to 80 percent. Sant County displays the worst case of degradation at 80
percent.

Table 1. Pasture status in project counties (NLA)

13
 Average
Total Pasture degradation status, ha
grass Degraded
pasture,
County names productivity Normal pasture in
thousand
per or slightly Low Medium high percentage
ha
hectare, kg degraded
Bayanundur 324.1 260 147.8 28.3 134.2 13.8 54.4
Sant 260.9 250 150.7 115.7 87.1 5.9 80.0
Hujirt 152.2 460 59.3 52.3 21 19.7 61.1
Hairhandulaan 410.8 150 225.1 74.5 55.3 55.9 45.2
Bayanlig 1118.7 110 856 116.2 39.1 107.4 23.5
Jinst 509 160 361.2 111.7 36.1 - 29.0
Bogd 365.8 160 304.6 0 44.8 28.3 20.0
Ulziit 374.1 400 217.8 133.9 22.4 - 41.8

2.3 IDENTIFYING THE PASTURE CARRYING CAPACITY (PCC)

Pasture carrying capacity is an important term used in the livestock sector among others.
The carrying capacity of a pasture is the maximum number of animals that can graze a
pasture throughout the grazing season without harming it. The carrying capacity ensures
adequate forage for grazing animals and leaves enough residual forage for re-growth the
following year. Residual forage protects soil from erosion and increases the forage yield
the following year by improving stand vigor, soil moisture and nutrient cycling.
Improving the productivity of a pasture can increase its carrying capacity.

In general, carrying capacity is largely determined by four factors: 1) annual forage

production, 2) seasonal utilization rate, 3) average daily intake, and, 4) length of the
grazing season. The following expression, which was adopted from Scott et al,
Agriculture and Agri-Food Canada, explains it in a simplistic manner.

Annual Seasonal
Forage Production X Utilization Rate
Carrying Capacity = --------------------------------------------------------
Average Daily X Length of
Intake Grazing Season

The following information in Table 2 was obtained through measuring annual forage
production in each of the eight counties, and taking into account reduced productivity of
pasture from 2008 livestock census data.

Table 2. Pasture Carrying Capacity in the Eight Counties

14
 County names Total Average Total Current Current Carrying Pasture Exceeded
pasture, annual available livestock, SEU*, capacity, utilization SEU,
kha grass feed, ton thou thou thou. rate, % thou. unit
yield, ton head unit head

Bayanundur 324.1 0.26 84.3 218.7 321.6 156.0 206.1 165.5

Sant 260.9 0.25 65.2 236.7 298.5 120.8 247.2 177.7
Hujirt 152.2 0.46 70.0 187.5 310.4 129.6 239.5 180.8
Hairhandulaan 410.8 0.15 61.6 194.5 246.9 114.1 216.4 132,8
Bayanlig 1,118.7 0.11 123.1 149.2 196.4 227.9 86.2 0
Jinst 509.0 0.16 81.4 119.3 127.3 150.8 84.4 0
Bogd 365.8 0.16 58.5 159.5 193.4 108.4 178.4 84.9
Ulziit 374.1 0.4 149.6 177.4 247.2 277.1 89.2 0

*Remarks: SEU – sheep equivalent unit.

1 camel = 5 SEU; 1 horse = 6 SEU; 1 cow = 6; 1 goat = 0.9 SEU;

Table 2 shows that SEUs in Bayanundur, Sant, Hujirt, Hairhandulaan, and Bogd counties
have exceeded the carrying capacity of pasture by 178- 247 percent. The pasture carrying
capacity of Sant County, for example, can keep up to 120 thousand SEUs, yet it is
supporting 326 thousand and currently all pastures are heavily utilized at a rate of 247%.
Sant County needs to decrease its SEUs by 177.7 thousand; otherwise, all the pasture
would be overgrazed in a short period, and a majority of the underfed and weakened
livestock will face a high risk of mortality from the recurrent natural disasters such as
dzuds and droughts. The 2009-2010 year dzud killed 135,471 livestock in Sant county,
which is almost as high as the target amount of 177.7 thousand SEUs. This dzud took
place while this report was being finalized. Thus, although some of the new numbers are
mentioned in the tables and figures, they are not reflected in the actual cost and policy
analysis. This incident reflects the vulnerability of herders to sudden natural disasters (in
addition to policymakers) to whom the death numbers are much more than statistics. The
target level of grazing efforts will have to be revised up or down in accordance with
climate conditions especially in the winter. In certain cases, dzuds will wipe out entire
livestock populations, alleviating the pressure to reduce livestock, but worsening the
pressure for herders to find alternative sources of income.

2.4 ENVIRONMENTAL IMPACT OF GOATS

The goat population has been growing without pause since 1990 and surpassed the sheep
population in 2004. In 2008, the sheep population was 18.3 million, and the goat
population was greater at 19.9 million. Nationwide, it appears that 600,000 goats are
added each year, and at this rate, the number of goats will reach 25 million in four to five
years (Bakei 2009). The subsistence nature of livestock husbandry, the ever increasing
prices (inflation) of commodities, easy access to buyers, and the easy liquidation of goat
assets have affected the mindset of herders into breeding as many goats as they can.
There is a shortage in awareness raising measures among herder communities about the
dangers of overgrazing and a scarcity of alternative income sources to meet the primary
needs of local inhabitants.

15
Among all of the livestock, goats have had the highest rate of population growth. On
figure 6, you will see that, the goat population has been more or less stable from 1971 to
1991 with deviations of 300-600 thousand. It increased sharply from 1992 to 1998.
However, the dzud disaster (heavy blizzard) of 2000, reduced goat numbers in these two
provinces to its 1990 level. Herd sizes have continued to increase and are at its highest
peak at 1.69 million goats in Bayanhongor province and 1.56 million goats in Uvurhangai
province. The sudden goat population growth increase was initially caused by the
privatization of livestock, and then further induced by worldwide popularity of cashmere
and its ever-expansive market demand.

Figure 6. Goat population growth as of 2010

Figure 6 shows that the goat population rate reached the 2008 rate after the dzud of 2009-
2010 in Bayankhongor province and the 2004 rate in Uvurkhangai province. The
population drop in Bayankhongor province is 16 percent, and the population drop in
Uvurkhangai province is 42 percent since the 2009 numbers.

From an environmental conservation and development point of view, there are several
reasons to keep the goat population at a steady level:

a) Goats uproot and browse vegetation, and selectively eat the seeds and young ones
of vegetation during the germination period (S.Tserendash 2009). Very familiar
with these goat tendencies, herders have traditionally kept the goat to sheep ratio
16
 at 1:3. This herd composition allowed the process of natural pasture regeneration
to occur. However, this composition ratio has been lost for many years.

b) Goats increase soil erosion the most from any other livestock because their sharp
hooves trample and break the crypto-biotic crust that covers soil (Bakei 2009).
There is neither any state regulation on goats nor are there any comprehensive
government policies that seek to address this problem. In fact, in fall 2008, the
government supported goat herders, which totaled a subsidy of 24.7 billion MNT.
(Look at section 4.2.5 for more details)

c) Goats are the most destructive of all livestock. The amount of forage they eat per
day is on average 5.9% of their body weight, whereas that of the other livestock
is a lot lower (S.Tserendash 2009). Given the option, they are capable of grazing
pasture until exhaustion (UNDP 2008).

d) Too much dependency on cashmere exports is a danger herders must avoid. The
cashmere market is becoming increasingly competitive with neighboring China
producing more quality cashmere throughout the years. Additionally, herders
receive a very meager sum by traders considering the amount of profit that they
make from the end product (Bakei 2009).

3.0 LOCAL SURVEY RESULTS

The purpose of the survey was to find out the opinions of herder families with regard to
their opinions about the quality of their surrounding ecosystem services, their perspective
of the severity of pasture degradation, the causes of pasture deterioration, the relative
impact of livestock on pasture, necessary government and herder input in pasture
management, and other pasture management policy options.

3.1 RESEARCH SITE DEMOGRAPHICS

The survey was conducted in the period between June 20 and July 20 of 2009. A total of
160 herders and their family members participated in the survey, which means that
twenty herder families from each county were surveyed. Most of the respondents were
family heads, of which 77% were men and 23% were women. We intended to question
ten herders that had goats and ten herders without any goats from each of the counties. As
will be explained in section 3.2, we were unable to carry through with that part of the
plan. Twenty five officials including county governors, deputy governors, local
parliament speakers, agriculture officers and environmental inspectors were also
interviewed. They also filled in survey questionnaires, which were specifically designed
to acquire their views on potential policy options.

The following tables illustrate the livestock ownership statistics of the 160 people who
participated in the survey. Generally speaking, 200 livestock is the minimum poverty
threshold number of livestock, and herders with 600 and more livestock are considered
17
extremely wealthy. Forty percent of the survey takers had livestock within the 0-200
range, and twenty percent had livestock within the 600-1000 range. In terms of goat
ownership, 53% of the respondents are within the 0-200 range, and 18% are within the
600-1000 range. Thus, two quintiles of the survey takers were extremely poor, one
quintile was fairly well off, and the remaining two quintiles were in the middle income
range.

Table 3. Total livestock owned by the surveyed herding families (2008 census data)

Hujirt Sant Hairhan- Bayan- Jinst Bogd Bayanlig Ulziit

dulaan Undur
Below 100 7 2 3 4 5 0 6 5
Within 100-200 7 2 4 2 4 6 3 5
Within 200-400 3 4 10 5 3 5 3 2
Within 400-600 0 5 2 4 4 1 3 3
Within 600-1000 0 6 1 2 2 1 3 3
Above 1000 3 1 0 3 2 1 2 2

Table 4. Total goats owned by the surveyed herding families (2008 census data)

Hujirt Sant Hairhan- Bayan- Jinst Bogd Bayanlig Ulziit

dulaan Undur
Below 100 15 4 8 3 5 0 6 5
Within 100-200 4 5 7 2 4 9 3 4
Within 200-400 0 9 2 5 5 3 2 2
Within 400-600 1 1 3 4 3 0 2 3
Within 600-1000 0 1 0 2 3 2 2 1
Above 1000 0 0 0 1 0 0 1 0

3.2 METHODOLOGY

We used a stratified random sampling method in our survey in which the herders were
grouped by the number of livestock they possessed (which can be seen on tables 2 and 3).
To keep the sampling process unbiased, livestock types and their quantities were
separately delivered to local agricultural departments. The data is taken from county level
2008 livestock census.

The survey questionnaire was prepared with six sections. The first section contains 18
questions related to the environmental problems of the local region, pasture and resource
degradation, causes of environmental deterioration, and the degradation impact of
livestock. The second, third, and fourth sections had questions related to the costs of
implementation of the potential three policy options. These sections had between 4 and
14 specific questions related with the implementation of each policy option. These three
options (which will be described later) were:

• Application of grazing fee for pasture utilization

18
 • Application of herder income tax
• Community management of pasture

The survey was taken in two steps: the first survey pre-testing period was carried out in
April 2009 in Sant county of Uvurhangai province. During the pre-testing period we
found some problems with the survey design:

• It was not possible to have equal numbers of respondents who owned goats and
respondents who didn’t own any goats. We found that almost everyone sought
to own goats due to easier access to the cashmere market, thus finding ten
respondents who didn’t own goats was impossible.
• The survey touched on the sensitive issue of the number of goats each
respondent owned. Because respondents were reluctant to expose their personal
income details, this part of the survey was made optional. However, we
received official livestock census data from government officials to ensure data
accuracy.

3.3 RESULTS

The summary of responses to the first set of questions regarding environmental

conditions and problems, and the main causes of deterioration are stated below:

Regarding the respondents’ opinions about the causes of environment problems:

46.3 percent- climate change through reduced precipitation

28.1 percent- increased livestock numbers and destructive human activities
25 percent- desertification, drought and sand movement
8.1 percent- decreased water availability

The majority of herders blamed decreased precipitation and climate change for pasture
deterioration (65.5%), and the remainder put the blame on increased livestock pressure
34.5%). Regarding the livestock species that impact pasture quality most the majority
said that goats were to blame (76%) and the rest (16%) said horses were to blame. There
was a consensus that goats represented the highest growing species and that there is a
relationship between livestock population growth and pasture degradation. Most herders
(74%) felt insecure about their customary pasture area during the seasons because they
were not legally entitled to the land, and a brave minority (7%) responded that they hired
people to ensure that their pasture was safe from free-riders. A critical question regarding
whether herders care about pasture quality in an open access pasture was answered in the
negative by a lot of herders (61%) and affirmative by the rest (32%). A sound majority
(86%) of the respondents stated that the government should get involved in pasture
regulation. Figure 7 illustrates the responses to the question on what sorts of measures
can be taken to utilize pasture more responsibly.

19
 Respondents' ideas for sustainable pasture management

community pasture
management
4% pasture law required
do not know w hat to 1%
do access to loan
5% 3%
no answ er
aw areness raising 39%
and training
8%

rotational use of
pasture
9%

reducing livestock practical measures

numbers through fencing,
13% planting, and irrigating
18%

Figure 7. Respondents’ ideas for sustainable pasture management

Key finding of the survey:

1) The majority of herders are aware of their surrounding environmental problems

and the main causes of pasture degradation, and they proclaim the need for
government involvement and strict regulations of pasture resources division that
are equally distributed.

2) A substantial number of herders believe that the main cause of pasture

degradation is climate change, which fosters inaction and hopelessness on their
part. This conviction supports the dangerous conclusion that herders themselves
are not capable of playing an important role in alleviating pasture problems by
working together to adjust herd sizes.

4.0 LEGISLATIVE FRAMEWORK ON PASTURE USE

There has never been any particular legislation defining the manner in which pastureland
should be used. Establishing legally binding regulations on pastures was not deemed
necessary with a sparse human population in such vast pastures. However, times have
changed and the Mongolian nomads have begun to outpace nature’s replenishing rate
with the sheer number of livestock they have been breeding. Although there has been a

20
livestock census system in Mongolia since 1918, currently, there is neither an established
system of assessing the state of pasture resources nor a nationally adopted system of
measuring the carrying capacity of pastures.

4.1 TRADITIONAL PASTURE REGIMES

4.1.1 Khoshuun system /1300s-1950s/

Traditionally, nomadic herders grazed the vast but fragile grassland by rotating animals
over shared pasture seasonally, and in a species segregated pattern. Herders were a part of
khoshuuns, where they shared labor resources and controlled their grazing patterns
according to pasture quality. These khoshuuns knew about the detrimental grazing habit
of goats and thus kept the sheep to goat ratio at 3:1. Ruling nobles and monks from
Tibetan Buddhist Temples operated the khoshuuns. Khoshuuns were better ecologically
distributed than soums today because they spanned north south to incorporate different
ecosystems (Mearns 1992). The khoshuun system was completely demolished during the
fifties, when Communism began to emerge in Mongolian politics.

4.1.2 Collective system /1950s-1990/

When socialism began to emerge in Mongolia, the state introduced collectives, also
called negdels, which were established in every county in the early fifties. In the
collective system, livestock was generally deemed common property and herders were
only allowed to keep their own herds of up to 75 heads. All of the operations were
centralized, and the quality of pasture was regulated by the state. This system was not
popular among herders because it did not reward herders according to their level of hard
work. This system collapsed in 1990 together with the collapse of the Soviet system.

4.1.3 Current pasture regime /1990s-present/

The current pasture regime is worse than both the khoshuun and the collective system
because regulations regarding the management of pasture are nonexistent. The pasture
use system is in chaos; there are constant disputes over who is entitled to use which
pasture and it has become the norm for herders to try to use as much pasture while they
can. Few herders feel obliged to assume responsibility over managing this deteriorating
resource. Since it is illegal to claim private ownership over pastures, why would herders
invest their time and efforts into protecting it?

Currently, there are a few number of herder groups scattered around the countryside,
which were established with the aid of international development organizations. The
herders in these groups manage the livestock together. Herding groups are becoming
more popular among herders, who are becoming convinced collective management is far
more effective than individual management.

The Land law stipulates that local governments are responsible for regulating pasture
utilization and the distribution of pasture use among herders in their territories. The

21
county parliament has to review and adopt pasture utilization plans for their county, and
its government office has to ensure that these plans are implemented. Despite this law,
there is no administrative framework, staff or sufficient funds for pasture resource
management within local counties.

Within the government structure, the Ministry of Food and Agriculture (MFA), and the
Ministry of Environment and Tourism (MET) carry the key responsibilities to addressing
the nationwide pasture degradation disaster. The Ministry of Food and Agriculture
shoulder the brunt of the responsibility over pasture management and are channeling
many efforts to improving pasture sustainability. However, it does not have the
environmental clout and focus that the MET has over the issue. Unfortunately, the MET
leaves the issue at the hands of the MFA, and does very little to push the issue, and to
support the MFA with their efforts. The limited cooperation between the agencies result
in certain activities that are done by both agencies (very inefficient) and in certain
activities that would have been much more effective with the participation of both
ministries.

4.2 CURRENT LAWS AND POLICIES PERTAINING TO HERDERS

There are very few laws and policies that pertain to livestock management. They are
mentioned below:

4.2.1 Land law 2002

This Land law contains the fundamentals of land resource management. Provision 52 of
this law defines the responsibilities of county governments regarding pasture regulation
in their local territories. It also allows herder communities to possess certain pastures
nearby winter shelters through contractual agreements with the respective county
administrations. Provision 58 of the law allocates a specific sum of money and specifies
the government’s land quality monitoring responsibilities. According to this provision,
the state should regularly monitor the conditions of land resources every 5 years through
its implementing agency. Due to the weak functionality of local governments and the lack
of cooperation between Land and Agriculture state agencies, the recommendations made
by the monitoring agencies are hardly ever followed up, and hence result in very few
outcomes. There is no clear framework within the central and local governments that
assumes responsibility of the regulation of pasture resources.

4.2.2 Law on land use fee 1997

In 1997, the government adopted the Law on land use fee, which imposes fees on all land
use types, including pasture use and hay collection. This law sets the amount of fees for
pasture use by each type of livestock, which is represented by sheep equivalent units
(SEU). This annual grazing fee amount ranges between 57- 77 MNT per SEU. However,
herders were exempted from this law from the very beginning. Thus, they have never had
to pay pasture use fees.

22
 4.2.3 Law on individual citizen’s income tax 2006

The Law on individual citizen’s income tax attempts to regulate livestock numbers by
taxing herders based on their livestock. The tax rate varies by economic regions (intended
to encourage even utilization of pastures). For example, annual tax per SEU in the central
region is 100 MNT (8 cents), the tax in remote provinces is 50MNT and in other regions
it is 75MNT. The herder’s tax rate is ten times lower than that of other citizens, whose
income tax is 10 % of their annual earnings. In June 2009, the parliament exempted all
herders from the individual citizen’s income tax justifying their decision with the 2008
economic crisis.

4.2.4 Pasture law draft 2006

The first Pasture law draft appeared in 2006. The draft essentially focuses on giving
rights to herders to possess winter and spring use pastures. This would allow herders to
make investments on the pastures of their possession to improve their rate of productivity.
In 2009, the draft was amended with a provision that gives possession rights not to
individual herders as in the first draft, but to entire herder communities. If this law
eventually gets passed, it is likely to regulate livestock numbers and herd composition
with regard to the pasture carrying capacity of their respective domains. Although this
can be a good policy instrument, it is still a draft after four years and there remain many
weak points. This law draft has been hindered from make progress because of the
continuous debate and criticisms that cloud the draft. Additionally, politicians are also
reluctant to pass this law because of the sensitivity that surrounds the issue, often among
their own constituents.

4.2.5 Government Pasture Policies

Best herder policy: After the collapse of the communist system, the state
promoted a policy to encourage citizens to breed livestock to support herders’ livelihoods
and to promote economic growth. In 1990, the government created an award called “A
herder with thousand livestock”. The reward has raised public criticisms that it is
pushing only for higher livestock numbers, and is very detrimental to the environment.
The government reacted by making some environmentally inclined revisions to the
award, which they renamed the “Best herder” award. However, the essence of this policy
remains unchanged. Additionally, all the provinces (total of 21 provinces) have their
own internal “a herder with thousand livestock” award systems. This is a failed policy
that counteracts the environmental mission of the government.

Goat subsidy policy: In October 2008, the government decided to support goat
producers because they represented one of the largest groups suffering from the economic
crisis. The government offered herders 5000 MNT for each kilogram worth of cashmere
that their goats represented (for every 1.5 goat). The total payments amounted to 30.5
billion MNT, which was taken from the Mongolian development fund, a fund which is
designed to benefit as much of the population as possible. Many other sectors were
suffering as much as the cashmere sector during that time. Again, the backwardness of

23
this policy illustrates the fact that the government still does not fully recognize the full
extent of the damage that goats impose on the environment.

5.0 POLICY OPTIONS

The following policy options were deduced from our research as possible solutions to
addressing the overgrazing and goat overpopulation issues in the chosen counties of
Bayanhongor and Uvurhangai provinces:

1) Communal pasture management regime

2) Application of fees on pasture utilization
3) Re-application of herder income tax
4) Pasture grazing quota

It is important to stress that the intentions of this report and of the government is not
merely to decrease grazing efforts and nor to reduce the goat population, but to do so in a
manner that makes grazing activities sustainable in the pasture areas. Thus, the starting
point for the policies investigation will be by determining the pasture carrying capacity
statuses of the target counties. The pasture carrying capacity status serves as the most
important indicator of pasture sustainability. The pasture carrying capacity will serve as
the main objective or threshold value of the policy options. To reach this objective,
substantial reduction of grazing efforts is required for five out of the eight counties in the
Bayanhongor and Uvurhangai provinces as can be seen in the table below.

Table 5. Baseline 2008 data for all policy options

County names Current SEU, Current PCC, thou head Pasture utilization Exceeded
thou units rate, % SEU, thou unit

Bayanundur 321.6 156.0 206.1 165.5

Sant 298.5 120.8 247.2 177.7
Hujirt 310.4 129.6 239.5 180.8
Hairhandulaan 246.9 114.1 216.4 132,8
Bayanlig 196.4 227.9 86.2 0
Jinst 127.3 150.8 84.4 0
Bogd 193.4 108.4 178.4 84.9
Ulziit 247.2 277.1 89.2 0

The pasture carrying capacities of five out of the eight project counties have been
exceeded. The pasture utilization rates that are in bold represent those counties whose
utilization rates exceed the optimal level. These 2008 figures show that these counties
need to reduce their existing livestock numbers substantially by the amount of SEUs
written in the rightmost column of table five. However, the dzud of winter year 2009-
2010 killed 8.4 million. The soums that were worst hit by the dzud were those five soums
that had livestock numbers exceeding their pasture carrying capacity. Thus, there is a
correlation between livestock numbers exceeding their sustainable numbers, and nature
actually proving that these numbers truly are unsustainable. Despite the decline in

24
livestock numbers in those five soums, they will remain a target area for concern in this
report because the herders are likely to raise their livestock numbers yet again.

Throughout the rest of the study only these five soums were studied. This does not mean
that the three other soums, that have fairly better pasture conditions will be ignored from
policy implementation. The three other soums: Jinst, Bayanlig and Ulziit will have lower
livestock reduction targets, otherwise, they also face the risk of facing unsustainable
pastures in the near future.

We came to the four policy options by first identifying the root cause of the unsuccessful
attempts by the government and all other involved parties to tackle the grazing
management problem. The following chart on figure 8, shows the identified root causes
and also shows possible solutions that seek to correct them. The four policy options were
borne out of this chart, and they represent different combinations of the solutions.

25
Policy problems that are related to
pasture deterioration

Lack of pasture regulations

A. Regulate pastures such that B. Establish a communal pasture

the carrying capacity is not management regime among herding groups
exceeded

Exclusion of herders from income tax

C. Tax herders based on their income

Exclusion of herders from land use (pasture) fees

D. Charge herders on their pasture use

Lack of investment in strengthening the

capacity of province governments

E. Increase training workshops to

strengthen the capacity of province and
soum governments

Lack of initiative to promote businesses in

the countryside

F. Increase investments in small and

medium enterprises

Promotion of goat population growth

G. Promote goat productivity instead of goat

population growth

Inappropriate rewards that promote

livestock population growth

H. Change the reward system to one that

solely promotes environmentally friendly
herding practices

Figure 8. Policy problems that are related to pasture deterioration

Once one of the policy options is chosen, they will undergo heavy monitoring that will
test whether the proposed reductions are successfully being implemented. Should the
delivery of the policy option warrant further improvements to ensure that the pasture
resource is maintained, we will consider stronger action and a tougher stance on reducing
grazing effort.

26
5.1 Option I: COMMUNITY PASTURE MANAGEMENT (CPM)

This policy option will establish herder groups for approximately every fifteen herding
families, and these groups will share a designated pasture area which they will use
exclusively. Their main responsibilities will be to coordinate their livestock movements,
to monitor pasture quality, and to ensure the quality of pasture by defining the livestock
size limits that suit their land. They will also pool funds to invest in pasture restoration
and protection. Trespassing by nonmember herders will be legally forbidden through a
contract made with the local government.

The involvement of central and local governments will be crucial during the initial
establishment of herder groups. The government’s role in this policy option will be to
oversee the successful management of the herding groups, to strengthen their capacity to
maintain strong and environmentally effective herder groups, and to loan out money for
investments in small and medium enterprises to improve the productivity of the livestock.
Members would need to be aware of where their herding styles fit into the general pasture
carrying capacity scenario, and know the legal borders of their specific groups (since they
won’t be fenced). During the first several years, the government will assist in settling
pasture delineation disputes and in monitoring pasture quality to ensure that the groups’
livestock is grazing within safe limits.

5.2 Option II: APPLICATION OF FEES ON PASURE UTILIZATION (FPU)

This policy option is based on the re-application of the pasture fee provision of the Law
on Land Fees. Herders will become obligated to pay fees based on their pasture use
subject to a more impact based index for each of the livestock species. The predicted
outcome of the policy is to see significantly reduced livestock numbers (especially goats)
within twenty years. This policy will take into account the pasture use inequalities that
exist between different herder, and will have features that provide more income options
for herders by supporting small and medium enterprises.

In Law on Land Fees the fee rate ranged from 55- 77MNT depending on natural zones
(fees were smaller in drier zones). The present value of 77 MNT of 1997 is 20 MNT
today (2010), which is 1.4 US cents per year for each SEU. If we consider that one sheep
eats 1.6 kilos of forage per day, it eats 584 kilos annually. The local market price of a 25
kilo bundle of hay is 2500 MNT ($1.80). This means that each sheep uses $20 worth of
feed annually. In comparison to this value of forage, the pasture fee of each SEU is far
too small (0.07% of this value).

In setting effective fee rates, we use five variables to target the animals according to their
respective level of environmental impact. The following formula, which is an updated
version of the traditional pasture fee formula, will be the main guideline for fee charges:

R = 77*Y*X*C*D*T

77 Base pasture fee per head of livestock in MNT

27
 Y Pasture quality (bad- 2, good- 1)
X Livestock type (3-goat, 2- horse, 1-sheep 0- camel, and cow)
C Pasture proximity (distant, not utilized- 0.5, heavily utilized- 1.5)
D Pasture carrying capacity (exceeded- 2, not exceeded- 1)
T Herd ratio of goats and sheep (doesn’t comply- 2, irrelevant/complies- 1)

Camels and cows are not charged with any pasture fees because they are not considered a
major risk to pastures and because their numbers are generally small compared to goats
and sheep. The underestimation of the impact of goat species on pasture quality is the
biggest downfall of the agricultural sector; the national SEU value of goats is set at 0.9.
This value of 0.9 blatantly misconstrues the negative impact of goats on pastures. In this
policy, the SEU of goats is set at 3. The above function shows that the pasture fee rate for
all of the livestock ranges between 77 and 1848 MNT. According to the formula, the
pasture fee for each goat will cost 1848 MNT in heavily degraded pastures. Applying this
policy will ultimately lead to increased productivity per head of livestock. Instead of the
traditional way of stressing livestock numbers, this policy will focus on pasture quality.

5.3 POLICY OPTION III: RE-APPLICATION OF HERDER INCOME TAX (IT)

The Mongolian tax law stipulates that every citizen should be taxed 10% of their net
income. However, herders were exempted from this tax law in 2009 because they
allegedly represented the most vulnerable members of society. This policy option
suggests the re-introduction of a slightly amended tax law on herders.

This law taxes herders on the number of livestock that they possess. The index system,
which makes assumptions about the economic value of livestock counts camels as 2
SEUs, horses and cows as 5 SEUs, and goats as 1.5 SEUs. Goats are valued as 1.5 SEUs
instead of 0.9 SEUs because of their cashmere production potential. The tax rate ranges
from 38 to 250 MNT. The calculations on appendix 1 shows that if herders were to be
taxed for their income, they would have been taxed at a rate of 0.07% as opposed to the
10% that all other citizens are charged. This tax law did not tax herders the normal 10%
income tax in the first place, and is unlikely to have affected the decisions of herders at
all.

To make the tax rate effective enough to make herders reduce their herd sizes and instead
optimize the productivity per head, this policy will follow the following equation, which
has made the tax rates substantially higher than their previous rate. The formula for
calculating tax levels is as follows:

Tg = 75 * T * Z * K

75 Base tax in MNT (as stipulated in the General Tax Law, 2003)
T Profitability of livestock: goat= 5, horse= 3, sheep=1, camel & cow= 0
Z Coefficient of goat age, Z=2 for male goats above age three, Z=1 for
others
K Coefficient of productivity

28
The first factor is based on the economic return of goat breeding. On average, a goat
produces 300 grams of cashmere, which yields about 9000 MNT (US$ 6.4) each year.
The second factor is the age of goats. In order to optimize their yearly profits, herders are
interested in keeping their goats alive as long as possible. Although the quality is
markedly poorer, five year old male goats yield almost twice the rate of one year old
goats. The third factor considers the productivity of each livestock type. Higher taxes are
imposed on those species that offer lower economic returns. The tax level ranges between
38 MNT to 2250 MNT a year per animal.

5.4 POLICY OPTION IV: GRAZING QUOTA FOR HERDERS (GQ)

Quotas are generally considered an effective tool for managing open access resources
throughout the world. This is especially so in fisheries. Although pasture is also an open
access resource, it is not as simple in the case of Mongolia. Our survey conducted on
herding households illuminates the feasibility and popularity of this policy option very
clearly. Quotas are only useful if the open access resource can easily be defined either by
manmade enclosures or by the very limited nature of the resources. Mongolian pasture
simply cannot be fenced. This type of quota management was tested for ten years in Inner
Mongolia; herders were given limited pasture and limiting herd quotas for changing
nomadic herding management into settled one. However, this quota based grazing
system is not suitable for Mongolia’s case. Mongolian herders are not nomadic of their
own accord, but are so because pastures are extremely vulnerable to climate conditions,
and limited plots of pasture do not guarantee consistency in their forage productivity.
Thus, we acknowledge that this is a possible policy option that is not feasible enough to
compel us to calculate its cost effectiveness.

5.5 POLICY OPTION V: NO POLICY (NP)

In the no policy scenario, no deliberated action will be carried out to combat the
overgrazing crisis. A large number of herders with already low herd sizes will lose their
herds to winter storms (dzuds) and starvation, and thus find themselves at a loss for
subsistence means. This will dramatically increase rural to urban migration, which will
further exacerbate the poverty and unemployment problems already existent in
Ulaanbaatar and other cities.

6.0 COST ANALYSIS

6.1 METHODOLOGY

There is a total of 997,500 livestock and over 5400 herding families in the five counties
with exceeding carrying capacities. To reach a number of livestock that does not exceed
the carrying capacity of the pasture, the total number would have to be reduced
approximately to 290,000 heads or 3.4 times. Considering the fact that livestock is the
only source of living for all these herder families and a majority of them have less than
200 livestock, (which means they live below or close to the poverty line), it is impossible

29
to reduce the livestock population in a short time period. Our approach to reaching this
level is a gradual reduction system that is to be carried out for twenty years. However,
twenty years is a flexible timeline, which may be shortened to fewer years if conditions
are more favorable than we predicted and pasture quality improves more rapidly than
supposed. This would happen simultaneously with investments in pasture restoration, the
establishment of schemes that increase livestock productivity, and the promotion of small
and medium enterprises for livestock raw material and dairy processing.

We exclusively calculated the costs for goats, sheep and horses because sheep and goats
make up 85-90.5% of the total livestock in the five counties, and horses come second
after goats in their level of environmental impact. To estimate the impact of the policies,
we first calculated the flock circulation, and then we used the flock circulation data in the
herder expenses component of the cost effectiveness equation.

We discounted the costs of the policies at six percent. The general interest rate of the
Mongolian Central Bank is currently at around ten percent. Although twenty years may
seem like too long a period for the policies to become fully implemented, this length of
time is necessary to guarantee that alternative sources of income and improved
technologies are solidly established, which would make herd reduction an easier process
for herders.

The following table illustrates the final reduction percentage rate of the goats, sheep and
horses that will be neccessary to effectively improve pasture conditions, at least to make
the pasture more sustainable. These livestock population reduction rates are subject to
change if the prices at which the products of the animals change relative to each animal.
These changes would have to made throughout the implementation of policy. For
example, if the price of wool rises with improved processing and marketing of the
product, herders may become more compelled to increase the sheep to goat ratio to even
higher than 3:1 such that the amount of grazing pressure is still maintained while the
flock composition is slightly changed. However, it is fair to say that these population
target ratios are a decently sound representation of their eonomic worth and their
environmental impact.

Table 6. Livestock reduction levels

Target 2008 Required 2010 Population Required annual

population Population annual reduction percentage
reduction rate
percentage (after 2010 dzud)
rate
(as of 2008)
Goat ~ 86,000- 485,417 39% 189,124 34.5%
87,000
Sheep ~180,000 426,504 37.5% 244,725 34.8%
Horse ~21,000 48,721 20.4% 31,254 18%

30
The following two figures show the livestock reduction rate plans before and after the
dzud. A comparison of these two graphs indicates the drastic impact of the dzud on the
livestock numbers. Again, the first figure is given more emphasis on this report, and the
second figure is there just to shed light to reduction rate fluctuations that may occur
throughout the years.

Figure 9: Livestock reduction rate

Figure 10: Livestock reduction rate incorporating the 2009-2010 dzud

Our population target level is based on the 1:4 goat to sheep ratio that is deemed most
suitable for the environment. The horse population target is set to be halved. The total
population of sheep, goats and horses spanning twenty years in the flock circulation

31
 calculations (see table 1 of the Excel spreadsheet) is affected by the birth rate, natural
death rate and our desired herd reduction rate.

6.2 FLOCK CIRCULATION

The flock circulation numbers represent the real economic value of each goat, sheep and
horse in the most holistic sense. These numbers illuminate the normative value; the total
monetary value of the animals that herders are capable of receiving if they are
successfully able to sell all of their livestock products at their current price levels.

The flock circulation calculations currently appoint value to the milk, hide and wool of
all of the livestock because of the potential profits they can reap in the future. They are
capable of bringing in profits if a large enough market is established to bridge the gap
between the customers and suppliers. There is certainly a large demand for the currently
unwanted milk, hide and wool, especially in Ulaanbaatar, but there is no established
intermediary mechanism that connects the suppliers and customers.

Table 7 shows the flock circulation calculation scheme of goats. The same scheme was
used for horses and sheep, but with different coefficients.

Table 7. Flock circulation calculation scheme of goats

Population converted into SEU SEU Conversion Coefficient 0.9 head

Death from natural causes for mature
Total Goat Population livestock /in percentage, average from the 0.0204 head
past 5 years/

Portions of the Percentage from the total population

Reproductive /average of the past 5 years of the nation's 0.404 head
population
population/
Number of offspring from every 100 births
Offspring /average of the past 5 years of the nation's 0.812 head
population/

Hide The percentage of livestock that will have 0.39 piece

their hide sold in the market

Meat The average product from each livestock 18.5 kg

Goat unit

Income Types The amount of milk that will be produced in

Milk one month of the summer season. 15 l
(Opportunity cost included)

Cashmere The average is taken from the Mongolian 0.28 kg

Breed. (Opportunity cost included)
Income Subtotal
Salary for herding
6000 MNT
labor The annual salary for each livestock unit.

Expenditure The hay will be used one month of the

Feed winter. Each livestock unit will consume 42 kg
Types 1.4kg per day.
Veterinary Costs The annual veterinary expenses for each 350 MNT
imposed on Herders livestock unit, taken from studies.

32
 Depreciation Costs The annual cost of the depreciation that
takes place on the maintenance of water
of Springs and 400
sources due to usage by livestock.
Wells
Expenditures Subtotal
Profit

The following numbers only serve to give one an idea of the relative values of each of the
livestock. These values of goats, sheep and horses are always changing because of price
fluctuations, especially in the meat market. These estimates show the positive and the
normative values of each animal in the five soums when 39% (goat), 37.5% (sheep) and
20.4% (horse) annual reductions are made to the following animals. This report stresses
the normative value of the livestock because they illustrate the potential value of the
livestock when their productivity is increased, and on the flip side, their negative
environmental costs. The positive value does not reflect the environmental costs; it also
shows the value of the animals with reduced productivity to the current ability of the
markets to brand the products and to offer it to its potential customers.

Table 8. Comparison of the positive and normative values of the livestock

Positive value (the value Normative value (the value it

today) should theoretically be)
Goats 6’010 MNT 4’530 MNT
Sheep 5’070 MNT 6’720 MNT
Horses 450 MNT 23’820 MNT

Apparently, sheep produce 5 kilograms more meat and 9 liters more milk than goats.
Thus, sheep are theoretically more valuable than goats. The cashmere market is far more
advanced and far larger in Mongolia because of its international popularity than the meat
milk, or wool markets. If the wool, meat and milk markets also become well established,
the value of sheep will become closer to their normative value.

The flock circulation calculations value horses at 23’820 MNT, a high price compared to
sheep and goats, because of the sheer size of horses. Horses are said to offer 120
kilograms of meat and 100 liters of milk. Female horses are much more valuable than
male horses because they produce milk. Among the female horses, the white ones are
more valued for their milk. Horse meat is not too popular in Mongolia, and horses are
generally used much less for their transportation means. Thus, unlike the flock circulation
value for horses, they are not as economically valuable as they appear. If the demand for
horse meat were to rise, this lofty horse value is more likely to be realized in real life.

When calculating the total income derived from wool, cashmere and milk, we subtracted
(excluded) their incomes from those livestock that were deliberately slaughtered to
reduce herd sizes. By doing so, we incorporated the opportunity cost of not being able to
further reap wool, cashmere and milk profits from these slaughtered livestock.

33
6.3 MEASURING THE COSTS

It was not possible to carry out a cost analysis on the different policy options simply
because they are structured such that some of them invest more in pasture rehabilitation
and others invest more in herder institutions. The effectiveness component of these
policies was unequally allocated from the very beginning. The following graph shows the
general steps we took for each of the policies when measuring their costs.

MNT per
Initial
Types of Costs, MNT animal/year or per Year 1
Population
soum/year

Total Goat Population 485 417 445 442

Total Sheep Population 426 504 408 386

Total Horse Population 48 721 46 748

Value from goats 5 000

946 563 150

Value from sheep 7 000

1 119 573 000
Household Expenditures

Value from horses 24 000

238 538 016
Investment for improved productivity of
SEU (Inbreeding support center)
194 080 000

199,104,000 for
Investment for pasture restoration
five years
199 104 000
33,500,000 for a
Investment for livestock raw material processing
(value adding) ten year loan
payback 33 500 000
Total Herder Revenue /in tugrugs/ 1 877 990 166
25,000,000 for 3
Support for herder groups
years 125 000 000
Pasture boundary delineation of herder 80,000,000 for 3
Government Expenditures

groups years 400 000 000

Initial 70
Detailed determination of pasture carrying
million, then 10
capacity
million per year 350 000 000
Costs for three technical Salary 9 000 000 45 000 000
staff for each Equipment and
administration in each 1 800 000
Technology 9 000 000
county (Community
support, SME Public
development, communal awareness and 3 000 000
pasture management, advocacy costs 15 000 000

34
 dispute resolution,
monitoring and
evaluation.

Investment for livestock raw material processing

(value adding) 335 000 000

335 000 000

Loan payment from herders

33,500,000 for ten
years
33 500 000
Total Government Expenses (-)
1 245 500 000
Total Policy Revenue 632 490 166
Present Value of Total Policy Revenue (at 6%
632 490 166
discount rate)

Figure 11: Policy calculation steps

The costs were divided into two sections; herder revenue and government expenses.
These costs were calculated for the next twenty years. Some of the investments were
designed to last five to ten years, which is why it was important that the costs of each
year were depicted in the measurements. The reason that the herder component of the
costs is described as ‘revenue’ is because they receive a net positive value from all of the
policies. Herders generally keep too many of their livestock on their feet, which is logical
because they act as a form of insurance from natural disasters. (However, the 2009-2010
dzud proved that the large herd sizes do not guarantee a safety net. There were many
cases where the entire herd of herders was obliterated by the dzud). This table illuminates
the fact that keeping large sizes of livestock is not economically profitable herders, who
should be keeping their livestock in business circulation.

6.4 BREAKDOWN OF THE POLICY OPTIONS

The three proposed policies have similarities and differences in their characteristics.
Policy 1, for example, has the most amounts of components whereas policy 3 is much
simpler. From the common government expenditures column, one can see that all of the
policy options will have an emphasis on establishing processing centers, which will be a
means to improve the productivity of the livestock and to create alternative sources of
income for herders. This will mean that not all rural inhabitants will have to rely strictly
on herding, which will also reduce the need for every family to own livestock.

35
 Table 9. Breakdown of the policy options

Common herder Common Components Components Components

cost government unique to policy unique to policy unique to
components expenditures option 1 option 2 policy option
components 3

value of goats, detailed determination inbreeding support pasture fees H tax expenses H
sheep and horses of pasture carrying center, for improved
that are to be capacity productivity of SEU
slaughtered /see app. 5/

loan payment for salary for technical investment for pasture restoration total tax
livestock raw staff pasture restoration expenses from 50% revenue G
material (herder) /see app. 3/ of pasture fee
processing center revenue G

equipment and expenses for support revenue from (50%)

technology costs of herder groups G pasture fees G

loan payment for pasture boundary

livestock raw material delineation costs G
processing center

public awareness and salary for three

advocacy costs technical staff G

large investment in
raw material
processing center,
SME /see app. 4/

Soft loan payments

from herders for the
processing center

6.5 POLICY COSTS

The government receives very little money from herders in the first policy. Therefore, the
herders receive the highest amount of profits because they receive the least amount of
burden from the government in turns of fees or charges. Policy option 1 displays an
annual average net profit of 1.11 billion MNT, which is second after option 3. In policy 2,

36
the government collects an ample sum of money from the pasture fees, but they have to
spend half of this amount on pasture restoration. This policy distributes the expenses to
the herders and the government more equally than the other two. Although policy option
3 seems to be profitable for both the government and for herders, it does the very
minimum to restore pastures and to support herder groups.

Table 10. Average annual policy expenses

Options Option I Option II Option III No Policy

Total +1.32 billion MNT +827 million +778 million At the current rate of
Herder (constitutes the profits MNT MNT degradation, most
Balance from livestock product (constitutes (constitutes herders will be left
sales, with very little the profits the profits without pastures within
expenses coming from from from livestock the next few years.
the herders) livestock product sales
product sales minus the
minus the income taxes)
pasture fees)
Total -212 million MNT -93.1 million +511 million
The government will be
Governm (the government will MNT (the MNT (the
pressured to subsidize
ent not receive any form government government
the failing livestock
Balance of revenue from the will spend will retain all
sector, to suffer
herders, and bear the half of the of the tax
negative economic
brunt of the restoration fee revenue revenue)
growth, and to deal
costs) on pasture with a large
restoration) unemployed
population.
Total +1.11 billion MNT +734 million +1.28 billion The net effect will be
Policy (consists mainly of MNT MNT negative to both the
Balance herder’s revenue) (consists (consists of government and
mostly of herder and society. The poverty
herder government level of herders will
revenue) revenue) rise drastically.

The values represented in table 8 and figure 10 were derived from 2008 livestock census
data. These numbers would be different we were to incorporate the fallen livestock
numbers resulting from the dzud. These values have the special function of showing the
costs of the different policy options relative to each other. The integrity of the relations
between the options will remain. In addition, these numbers show the costs related to a
situation where there is excess livestock, which is generally the situation in these
provinces. To incorporate livestock figures showing unrepresentative livestock numbers
would not meet the goals of this report.

37
Figure 12: Costs of the policy options

6.6 CRITERIA SELECTION FOR POLICY OPTIONS

The economic performance of the options should not be the sole determining factor of
which policy is ideal for Mongolia. Certain policies may be great in theory but not
practical or realistic in the real setting, thus a practicality criterion is factored in. A policy
is not ideal if there is no political will in the part of the government to pass laws
supporting those policies, thus the likeability, or the government’s attitude will be the
third criterion. The fourth criterion is the support of the policies by the main stakeholders;
the herders. Herders should ideally agree with the policy methods and be able to
cooperate with the government in fulfilling their responsibilities within the policy. A
mutual agreement on the necessity of the policies has to exist for a policy to pass.

Table 11. Selection criteria for policy options

Criteria Weight Description MeasuresMethodology for

evaluation
Relative cost ** The cost to revenue 1-4, 4 being Cost and revenue
ratio, which will the most cost calculations
illustrate the effective
relative cost of the
policy. This must
not be mistaken
with cost

38
 effectiveness.
Practicality ** How feasible the 1-3, Past pasture
policy is of actually impractical, systems and
working out slightly regulations and
successfully practical, very their success
considering the practical rates.
surrounding
conditions.
Government’s * The willingness of 1-3, unwilling, Past records of
attitude key policymakers somewhat laws and policies
and legislators to willing, very to examine the
pass laws and willing government’s
support the policy. tendencies
Herder’s **** The willingness of 1-3, unwilling Herder survey
acceptance level herders to to cooperate,
cooperate with the somewhat
policy willing to
requirements. cooperate, very
willing to
cooperate
Impacts (positive *** The extent of 1-4, 4 meaning Expert judgment
and negative) impact of the the highest
policy, whether amount of
they be positive or positive impact
negative.

Each of the five components will be measured on a scale of 1 to 4 or 1 to 3, with the

higher score being more favorable in terms of policy implementation.

6.3.1 Policy option I. Community pasture management

1) Relative cost /3 out of 4 points/

This policy imposes the highest costs on the government and provides the highest profits
to herders. It ranks second in terms of total policy expenditures. However, it ranks first in
its average relative cost because the level of government aid falls dramatically as the
years progress. Nevertheless, this policy has the most unequal distribution of costs within
the involved parties.

2) Practicality, success rate /4 out of 5 points/

Through a communal pasture management regime, herders can implement the

mechanism of division of labor, which simultaneously allows all groups to benefit.
Herding groups have other benefits such as offering a sense of security to herders because
mechanisms such as collective funds safeguard members from losing everything in times
of emergencies. This policy is deemed fully practical because it gives herder groups

39
exclusive property rights to their pasture. Having exclusive rights gives herders more of
an incentive to investing more of their time and efforts into ensuring that their land will
be able to sustain them for as long as possible. However, this option has one large
challenge of causing disputes among herding groups with respect to border delineation
and internal disputes regarding the division of responsibilities, especially between the
rich and the poor herders. These disputes pose a threat of breaking up herding groups,
which must be taken into consideration when designing and setting up these groups. An
action plan will be produced, which will define the steps and procedures to be taken
should there be a split in a herding group. The first goal will be to reconcile the members
of a group, but if that effort fails, the remaining herders will be strongly encouraged to
become members of other herding groups in the surrounding area.

3) Government’s Attitude /4 out of 5 points/

This option requires substantial involvement of the government during the first several
years. The government will need to do an inventory of existing pasture resources,
implement fair division of pasture to emerging herder groups, establish property
boundaries and set up a clear legal framework that allows everything to operate as
smoothly as possible. Upon organizing such activities and completing them within the
first five years, the government’s involvement will be limited to monitoring the contract
implementation by various herder institutions and a periodic assessment of pasture
quality. Oversight of implementation of pasture agreement is the government’s main
function. This policy option requires the most active participation of the government, and
the government has to be responsible for many different activities. In this respect, it
expends the most time, energy, and money from the government. However, out of all of
the policy options, this policy option is the most diplomatic form of dealing with the
pasture problem because it does not impose direct financial obligations to herders. It is
politically easier for the government to carry out, but it requires the most grueling work.

4) Herders’ Support /5 out of 5 points/

Although a communal pasture management system will cost the herders a lot from the
reduction they will have to make in their herd sizes, they are not directly asked to pay up
cash. They will instead be asked more to offer their time and commitment to maintaining
the strength of their respective herding groups. Herders are offered a leading role in this
form of management. This policy offers the most amounts of support services to herders
(as seen on table 6), and aids them through the transition to smaller herd sizes. The
services include offering pasture restoration, establishing an inbreeding support center
and a herder support mechanism. This policy has the highest amount of benefits and
positive externalities to herders because a collected effort in the shape of herder groups to
reduce herd sizes to match the area’s carrying capacity improve the time and resource
allocation of everything. This substantially improves the herders’ access to group services.

A small portion (11 respondents) of the survey-takers was members of herder groups, and
they pointed out the necessity of all other herders to join similar regimes. Their argument
was that a few herder groups would not be as efficient if large numbers of individual

40
herders surrounds them. The survey results also show that 85 percent of respondents
emphasize the need for government to regulate pasture use. Approximately forty percent
said the government should give the right to herders to posses the pasture resources, and
seventeen percent of respondents said that pasture possession rights should be given to
herders’ informal and formal groups. Respondents had diverging opinions on the case of
individual pasture ownership although the majority was in favor of a communal pasture
regime. A little over half of the 160 respondents had had experience with formal and
informal herders groups. These groups had focused on uniting their labor on haymaking,
felting and crafting.

5) Impacts (Positive and Negative) / 4 out of 4 points/

This policy will fragment the pastures of the five soums into many pieces. However,
direct physical barriers, such as wooden fences, will not separate these fragments. If the
attributes of this policy runs successfully, this policy is capable of having the most
positive environmental impacts, because not only will it mean planning set targets to
reduce livestock numbers but it also means managing livestock grazing in various
regulatory ways. This policy option represents an active solution to improving pasture
quality and keeping the balance between pasture overgrazing and ecosystem resilience.

During the initial stage of the policy implementation, herders will experience a deficiency
in their household budget because of the reduction in their livestock numbers. However,
other measures proposed in this policy option, such as the inbreeding, livestock raw
materials processing through small and medium enterprise development and increased
dairy production as well as community development, will eventually compensate for this
negative impact and yield positive results.

Overall Score: 20 out of 23 points

6.3.2 Policy option II. Application of a Fee on Pasture Utilization

1) Relative cost /2 out of 4 points/

In this policy, the herders rank second in receiving profits, the government ranks second
in policy expenditures and the cost to revenue ratio is also second in ranking. It is the
golden mean policy option among the three policies. The costs incurred on herders and
the government is the most equally shared out in this policy.

2) Practicality /2 out of 5 points/

Herders are not used to paying any form of fees to the government to carry out their daily
operations (herding). A pasture fee system exists in the law, but is currently exempted
from being enforced; thus, it is mainly a matter of implementing it. It is more practical
than policy option 3 because it is less costly, but is less so than policy option 1. The
pasture fee for goats is lower than the goat tax level in policy option 3. However, the
sheep and horse fees are slightly more than that of policy option 3. It is unlikely for

41
herders to follow suit with paying pasture fees, when they have never had to pay them
and when they have financial worries enough. On the contrary, herders are accustomed to
receiving all the charity and assistance that they can get from the government. The
government should do so in the right manner, a manner that does not breed further
dependency.

3) Government’s Attitude /2 out of 5 points/

The government will receive some revenue from the pasture fees, though their general
balance will still be negative. In 2008, the government was trying to support the
expansion of the goat population. Thus, this policy will be very inconsistent with the
government’s track record. Most government officials will therefore be quite reluctant to
support a pasture fee system. The key legislators (parliament members) have to answer to
their constituents, which are mainly comprised of livestock herders. Because their
chances for future election are at stake if they pass undesirable laws for their herder
constituents, they will generally be fearful of passing the pasture fee law.

4) Herders’ Support /2 out of 5 points/

The herder mentality is that the government is not doing enough to support their arduous
lifestyles, and that they have a responsibility to aid herders as much as possible. It is most
probably the case that the government is not doing enough to improve the welfare of
Mongolia’s herding population. However, the government’s role is not to be a charity
organization, but is to be a leading implementer of successful policies and systems that
make the lives of their citizens a lot easier to endure. Thus, herders will not be in favor of
the pasture fee system despite the fact that half of their payments will be spent on pasture
restoration.

5) Impacts (Positive and Negative) / 2 out of 4 points/

Half of the revenues collected from the pasture fees will be allocated to pasture
restoration. In the first year, the pasture fee revenue is 529 million, which when divided
into the five soums, is approximately 160 million MNT per soum. This amount is enough
to make a perceptible difference to the quality of pastures in each soum. Compared to the
first policy option, this option has fewer regulatory features to pasture use. The
environment will mostly benefit from this policy option through the pasture restoration
funds. In terms of environmental impact, this policy is the most favorable policy, which
proposes direct pasture restoration activities from its first year of implementation (based
on the regular pasture fees). Its impact that reduces the household budget is also as
significant as the first policy option.

Overall score: 10 out of 23 points

6.3.3 Policy Option III. Herder’s Income Tax

1) Relative cost /3 out of 4 points/

42
This policy option looks financially too good to be true; herders receive a substantial
amount of net profit (though it is the lowest of the three), but most importantly, the
government receives a net profit (more than the other two). The government receives a
net profit because all of the taxes are taken in as revenue. Unlike policy option 2, the
government does not have a commitment to spend a specific portion of the revenues on
efforts such as pasture restoration. The relative cost ranks second out of the three policies.

2) Practicality /3 out of 5 points/

The tax level is higher than the pasture fees. However, it is easier for herders to accept
that they have to pay their taxes (which all lawful citizens are obliged to pay), which is
higher than before, but is still not the 10% of income taxes that other citizens have to pay.
Herders are also more familiar with tax payments because they had to pay between the
years 2006 and 2009, whereas they have never had to pay pasture fees. The tax collection
system is more advanced than the pasture fee collection system.

3) Government’s Attitude /2 out of 5 points/

There is some appeal to this policy to government officials; this policy will bring in a
substantial amount of revenue that will raise the government’s budget. However, with the
2009-2010 winter year dzud that killed over 8.4 million livestock, this policy would
appear to target the most vulnerable and suffering group in society. Thus, the government,
which is protective of its perception by herders, will be especially wary of passing such a
law. The government will meet increased pressure from herders to heighten their support
without imposing any burdens on the herders themselves.

4) Herder’s Support /2 out of 5 points/

This policy imposes the highest charges on herders. There is also no guarantee that the
total tax amount will return to the herders and directly benefit their lives. This policy
offers very few promises to herders and is the harshest policy option. There is very little
appeal in this policy option, and herders, although they will be familiar with the tax
principle, will be extremely vocal about their difference in opinion.

5) Impacts (Positive and Negative) / 1 out of 4 points/

This policy option should already exist in the legal framework. There is no reason why
herders, who are also citizens using the country’s services should not be paying their
taxes like any other citizen. However, with respect to our specific goal of introducing
sustainable pasture management policies, this policy will have the least impact. This
policy does not have the many special services that herder groups would have, nor does it
allocate half of its revenues to pasture restoration like policy option 2. Thus, this policy
option has the lowest impact ranking.

Overall Score: 11 out of 23 points

43
Table 12. Criteria points of the policy options

Criteria Policy Option I: Policy Option II: Policy Option III:

CPM FPU IT
Relative cost (out of
3 2 3
4)
Practicality (out of 5) 4 2 3
Government’s
4 2 2
attitude (out of 5)
Herder’s acceptance
5 2 2
level (out of 5)
Impacts, positive and
4 2 1
negative (out of 4)
Total Score 20 10 11

7.0 CONCLUSION

Policy option 1 has the highest ranking in the cost effectiveness criteria; however, policy
option 2 is also not too far behind in its level of competency as a feasible policy option.
Policy option 2 would be more challenging to gather the full support of the government
and the herder population in spite of its more straightforward nature and market based
approach to reducing the negative impact of goats, sheep and horses on the environment.
Land degradation is a very pressing matter in Mongolia, and time is a very important
factor in the success of any of the policy options. Policy option 1 offers the speediest
policy solution because it is the easiest to be accepted by the different stakeholders. This
report concludes that a hybrid option of policy options 1 and 2 should be implemented in
Mongolia. A legally required pasture fee system in which the pasture fees of the local
regions go to the herding groups of the respective areas would strengthen herding groups
and impose a smaller burden on the government. Currently, herders who stricken with the
losses of the dzud and are facing poverty, will be in a very weak position, and in most
cases incapable of paying mandatory pasture fees.

Policy option 2 incorporates the valuable factor of making the herding group system
generally more equitable, which is in fact one of the main threats of policy option 1. In
policy option 1, the poorer herders are very likely to resent the wealthy members of their
herding group since they would inevitably be using a larger portion of their shared
pasture. Wealthier herders are less likely to be affected by the communal herding group
system because they have the option of not completely cooperating with their groups
about cutting down on their herd sizes. They are in a stronger position to cooperate with
the rules of systems that have a mandatory compliance feature, which imposes more
market based and straightforward responsibilities, such as the pasture fee policy.

We mentioned that herders in herding groups would be agreeing upon a group tax and
putting the collected money into a fund for pasture restoration activities. However, it

44
would be much more efficient if the entire nation had a general pasture fee system that all
herders would be obligated to follow. The reason that this is important is that with
varying fee systems within different herding groups, some are likely to be more
successful than others are. Herders from herding groups with high pasture fees are likely
to want to transfer to a neighboring herding group that has lower fee rates. Thus, making
the fee system a legal responsibility for herders is definitely ideal, however, it would be
wiser to incorporate this feature three to five years after the herding group system has
formed and established itself as a real operating system. By the fifth year, the actual
experience of the herding groups with internal pasture fees would be useful to make the
most efficient and effective pasture fee law throughout the nation. By this time, the
mentality of herders is also likely to have changed such that they feel more responsible
for the quality of their pastures and hence more accepting of such a law. Additionally,
herders will have found jobs that do not require herding, and will be in a better financial
situation to comply with the demands. It is not within the scope of this report to measure
the direct costs and expenses of introducing the pasture fee policy (option 2) into the
herder’s group policy (option 1). It would require more intensive surveys from herders,
and an actual case study of an operational herding group. Introducing policy option 2 will
be very successful provided that the policy option 1 is running fairly smoothly within the
first five years of implementation.

The expected outcome of the hybrid policy of policy options 1 and 2 will be to make a
marked difference on the quality of pastures and to ensure that it becomes sustainable for
the number of livestock on the long run. For this to happen, a lot of emphasis will lie on
improving the productivity of each livestock through the establishment of small and
medium enterprises (SME) and through the improvement of livestock breeds. By doing
so, herders will begin to look away from trying to maximize their herd sizes, but instead
try to optimize the quality and productivity of their individual herds.

8.0 RECOMMENDATIONS

The key recommendations borne from this report falls on the government of Mongolia.
The central government is responsible for coordinating and arranging the functions of all
of the regional governments in a manner that is much more efficient than it is today. The
following recommendations offer guidelines that the government should pursue
immediately.

ƒ Define its development policy. The government should define a development

policy that incorporates an understanding of the importance of the fact that
Mongolia is overpopulated with livestock whose impact far outweighs the
carrying capacity of the pastures of Mongolia due to both livestock
overpopulation and mismanagement of pasture grazing. The main aim of the
policy will be to improve livestock productivity minimize the impact of each
livestock.

ƒ Set limits to goat species through the use of command and control and/or market
based methods. Goats should be the priority species that should face reductions,

45
 however this is subject to change depending on market, productivity and
population circumstances of livestock.

ƒ Create alternative livelihood options for rural populations. The pressure on

pastureland would be greatly reduced with the establishment of small and medium
sized enterprises that process raw materials and dairy products in rural areas.

ƒ Enhance the livestock productivity per head. This should be by market based
incentives such as offering better inbreeding mechanisms and promoting the
utilization of parts of an animal that was previously unused and had no economic
value.

ƒ Adopt a pasture law with a specific emphasis on ecological sustainability and on

the proliferation of communal pasture management systems.

ƒ Improve coordination between the different ministries that handle the affairs of
herders. In order to do this all of the policies of the different ministries that relate
to herders and pastoral ecosystems should be reviewed, and changed when
necessary.

ƒ Invest a lot of its capital on public awareness campaigns and training programs.
These campaigns should educate people about the destructive nature of current
land use regimes, and offer tools and solutions to improving this situation.

46
 BIBLIOGRAPHY

Bakei A. 2006. Conference Proceedings “Issues for pasture management improvement”

pp. 10-19. Ulaanbaatar, Mongolia.

A.Bakei, P. Badarch, B. Binyee. 2009. “Development Trends of the Goat Industry”. Goat
herd: the most pressing ecological and economic issues. Pages 9-21.Ulaanbaatar,
Mongolia.

D.Dungu and G. Bayarsaikhan. 2009. “Improving the productivity and reproductive

quality of goats”. Goat herd: the most pressing ecological and economic issues. Pages
33-41.Ulaanbaatar, Mongolia.

Dorligsuren D. 2006. Proceedings on Issues for pasture management improvement pp.

20-63. UB Mongolia

Foggin Marc. Depopulating the Tibetan Grasslands: National Policies and Perspectives
for the Future of Tibetan Herders in Qinghai Province, China Mountain Research and
Development Vol 28 No 1 Feb 2008: 26–31 doi:10.1659/mrd.0972

Oyunchimeg and Zagdsuren 2006. Conference Proceedings “Issues for pasture

management improvement” Grazing impact of goat to pasture pp. 150-158. UB Mongolia

Michele Nori, Michael Taylor, Alessandra Sensi 2008. IIED issues paper no. 148.
Browsing on fences Pastoral land rights, livelihoods and adaptation to climate change

S.Tserendash, N.Erdenetsogt and L.Narantuya. 2009. “The Pasture Use of Goat Herds,
and Various Ecological Issues”. Goat herd: the most pressing ecological and economic
issues. Pages 22-32. Ulaanbaatar, Mongolia.

Swiss Agency for Development and Cooperation. Coping with Desertification Project.
2009. UB Mongolia.

UNDP Mongolia, Ministry of Food and Agriculture, and Ministry of Nature and
Environment. Sustainable Land Management to Combat Desertification (2008-2012).
Report. Ulaanbaatar.

Williams Dee Mack. Grassland Enclosures: Catalyst of Land Degradation in Inner

Mongolia Society for Applied Anthropology Volume 55, Number 3 / Fall 1996

47
 APPENDICES

Appendix 1.

County Population Household

Province names total man women total Urban Rural
name
Bayan 4261 2113 2148 1204 171 1033
Uvurkhangai under
Sant 3525 1771 1754 1148 180 968
Hujirt 6649 3240 3409 1903 803 1100
Hairhan 3510 1762 1748 1038 211 827
dulaan
Ulziit 3477 1692 1785 1002 238 764
Bayankhongor Jinst 1958 993 965 537 133 404
Bogd 2909 1391 1518 788 171 617
Bayanlig 3413 1694 1719 888 239 649

48
Appendix 2.

We made comparison of tax due amount and income of an entire Sant County. Sant
County has 1067 herder households and average family member per household is 4.
County households possess 6,090 cows, 7,821 horses, Camel -735, Sheep- 114,507 and
107,631 goat.

Total SEU 6,090 cows * 5 + 7,821 horses * 5 + 735 Camel*2+ 107,631 goat *1.5+
114,507 sheep= 347 thousands SEU.

Total human population 1067 households *4= 4,268 persons

Tax exempted 20 sheep per person. This is to ensure that poor are not affected by income
tax:

4268 persons * 20 sheep per persons= 85,400 SEU

To find total tax amount, which county’s all herders due:

In order to do that it is need to find taxable SEU

347,000- 85.400= 261.6 thousand SEU

Then, total tax amount is 261.6 thousand SEU * 75 MNT= 19.6 mln MNT

Now to find total approx. income from livestock:

347,000 (total SEU) * 80,000 (market price of average sheep) = 27,758.3 mln MNT

Comparing these values: total tax/total SEU= 0.07%

49
 Appendix 3

The policy includes an investment for restoration of highly overgrazed areas in these 5
soums. In total, there are 123.58 hectares of highly degraded pastures in these 5 soums
(see table 5 on page 4). Herder households, whose livestock exceeds the carrying
capacity of their possessed pasture, should make a mandatory investment for pasture
restoration. It is calculated that 995.52 millions MNT is required for the restoration of
123.58 hectares of highly overgrazed pastures (see investment costs of highly overgrazed
areas of each of 5 soums in table below). Based on identified investment costs required
for restoring highly degraded pasture, each soum government determines annually the
number of areas for restoration and investment cost in each of the five years. Then, the
local government divides this required investment among those households or herders
groups, whose livestock numbers exceed the pasture carrying capacity (PCC). This way,
we expect faster compliance of herders with PCC under the policy option I: communal
pasture management.

Table. An estimated investment budgets for restoration of highly overgrazed pastures in

the project 5 soums

Soums name Degraded Cost of Total costs of

pastures to be Soil type Dominant pasture Site location restoration of a restoration highly
restored (in plants in the natural hectare pasture degraded
hectares) zones (Million tugrug) pastures
(Million tugrug)
1 Bayan-Undur 13.8 Chernozem Dry steppe stipa Steppe 7.8 108.8
community
2 Khujirt 19.7 Chernozem Dry steppe stipa Forest steppe 7.6 150.2
community
3 Sant 5.88 Chernozem Dry steppe allium Steppe 7.8 46.2
gravelly mongolicum
community

4 Khairkhan 55.9 Steppe 7.8 436.02

dulaan
5 Bogd 28.3 Desert grey Semidesert 8.9 254.3
brown
Total 123.58 39.9 995.52

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Appendix 4

Required investment for SME (livestock raw material processing)

The funding source of the small and medium enterprises (SME) will be the SME
Department of the Ministry of Food Agriculture and Light Industry, which will give out a
ten-year soft loan to herders. The government adopted the Law on SME in 2007, and has
started funding various business proposals. Based on the livestock raw materials available
in these five soums, we are proposing the following SMEs in this region.

Investment per Required

Type of SME
SME, MNT SME unit
Milk processing 38,000,000 5 190,000,000
Wool processing 10,000,000 2 20,000,000
Food processing 5,000,000 5 25,000,000
Cashmere
processing 50,000,000 1 50,000,000
Meat production 50,000,000 1 50,000,000
Total 335,000,000

This measure will stimulate local production through raw material processing center and
create alternative jobs to newly unemployed herder. This will in turn diversify income
generation and encourage herders to pay more attention to increasing productivity of their
livestock as opposed to traditional herding management.

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Appendix 5

Price (thousand MNT)

Expense Type Measuring unit Amount Unit Total
Livestock productivity
database Piece 1 15 15,000
Wool length Piece 1 40 40,000
Employing a livestock
reproduction specialist job position 3 4500000 13,500,000
Motorcycle for each
specialist
Piece 3 1200000 3,600,000
Father livestock animal for
inbreeding Head 2500 70000 175,000,000
Identification registration
for each animal (earring) Piece 10000 150 1,500,000
Earring metal Piece 1 250000 250,000
Weight scale Piece 1 25000 25,000
Weight scale to determine
productivity of
wool/cashmere (very
detailed) Piece 1 150000 150,000
Total (thousand MNT)
194,080,000

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