Effective urban development and management are vital for the successful implementation of Mongolia's Nationally Determined Contribution (NDC) action plan. The Government of Mongolia is actively working towards the accomplishment of a green development policy as well as green recovery, urban and rural recovery under the New Revival Policy approved by the Parliament in 2022. To effectively implement these policies, public and private sector collaboration as well as the mobilization of private investment are critical but are currently insufficient in Mongolia. 

This Readiness proposal aims to identify financing schemes and incentive mechanisms, including risk-sharing facilities, loan guarantees, or tax incentives for private sector entities to promote regional green development by unlocking domestic and foreign private investments and identify successful blended finance (concessional financing with private finance) models and approaches. The financing schemes and incentive mechanisms designed under the proposed project will be operationalized through subsequent development and implementation of a GCF-funded activity by TDBM to support low-carbon and climate-resilient regional development of Khanbogd soum, Umnugobi aimag/province and similar efforts in other cities and regions across Mongolia. 

The proposal targets Khanbogd soum (KB) in southern Mongolia within Umnugobi province. KB is projected to witness a significant in-migration due to the declining viability of traditional nomadic livelihood in surrounding areas caused by worsening desertification, droughts, and other extreme weather events due to climate change and expanding mining, industrial and service sectors that create economic and employment opportunities.    

The local governments will directly benefit from the Readiness project through more definite implementation plan of the KB’s Master Plan. Private sector entities will benefit indirectly through better engagement in developing green investment landscape and enabling conditions for low-carbon and climate-resilient technology application.