ULAANBAATAR, MONGOLIA – Most evenings Bazarsad Namkhai has a toilet break in a pot in his front yard. In the morning he trudges to a public tap to get water. He’s done this since moving here 25 years ago. “I’m almost used to it,” he says.

But he can’t get used to the air. Ulaanbaatar, Mongolia’s rapidly growing capital, sits in a river valley. This makes for a stunning setting but forms a basin trapping smog from thousands of coal-fired stoves, boilers, vehicles, and a few old power plants, as well as road dust. It’s particularly bad during the frigid winter when poor households burn anything they can including trash and old tires to stay warm, blanketing much of the capital in a thick brown haze.

As temperatures plunge, pollution can average 20 times limits recommended by the World Health Organization (WHO) with daily levels up to 80 times higher, making Ulaanbaatar the world’s most polluted city in wintertime. Estimates suggest that 10% of the city’s deaths in 2013 resulted from complications caused by air pollution.

“The smog is getting much worse,” says Bazarsad, a 65-year old former security guard. “At night it’s so bad you can’t see where you’re going. It’s affecting my lungs.”

An unplugged system

Ulaanbaatar faces challenges around pollution, infrastructure, and housing that mirror those in other fast-growing Asian cities. But its harsh climate and rapid social and economic change present unique challenges. It is becoming effectively two cities: an expanding, deprived fringe; and a more affluent but increasingly congested core where most jobs and services are clustered.

The fringe is a vast sprawl of wooden houses and traditional ger tents cloaking the surrounding hills over more than 100 square kilometers. These “ger areas” have expanded over 30 years, becoming home to migrants from poorer parts of the country including many herders fleeing increasingly severe winters and summer droughts attributed partly to climate change.

Today an estimated 840,000 people live there, just over half the capital’s population. Ulaanbaatar has grown by more than 30% since 2007, due mainly to expanding ger settlements, and is expected to number 1.9 million people by 2025.

The city’s aging infrastructure isn’t coping. Few roads are paved in the ger areas. There’s no sewage connected at most buildings so residents use outdoor latrine pits or pots which spread disease and pollute soil. Access to electricity is patchy and running water available only at public kiosks for most households. In a country where winter temperatures can plunge to minus 40° C, there’s little central heating.

Private companies avoid these settlements, so commerce and jobs are scarce.

“They lack everything,” says Arnaud Heckmann, a senior urban development specialist at the Asian Development Bank’s office in Mongolia. “These areas are unplugged from decent infrastructure, public facilities, and from the wider urban economy.”

Mapping a new city

“Everything we have here in the center, they will have there.”

Bayarkhuu Purvee

Bayarkhuu Purvee, Ulaanbaatar’s deputy governor, envisages a very different city. He leads infrastructure and ger district development and wants to bring better infrastructure, services, and housing to the area.

The neighborhoods are too large and entrenched to relocate, so they must be integrated with the rest of the city. This is challenging in a country relatively new to urban planning, where high property prices make home ownership impossible for many residents.

“I have a much brighter future in mind,” says Bayarkhuu, who foresees a better planned city with better roads, but also with swimming pools, stadiums, restaurants, and big hotels. “Everything we have here in the center, they will have there.”

Jobs are the key to this transformation. Creating them means building basic infrastructure to attract private companies to ger areas.

Upgrading urban infrastructure

To kick-start that process, the first tranche of financing for the Ulaanbaatar Urban Services and Ger Area Development Investment Program (GADIP), has started works to upgrade existing sub-centers—administrative and commercial hubs located within the ger areas.

It will build priority infrastructure such as heating facilities and networks, sewerage services, roads, bridges, a water supply network, water reservoirs, public parks, kindergartens, and business incubators with vocational training facilities. The $320 million program is financed by $164 million in loans from the Asian Development Bank (ADB), $96 million from the Municipality of Ulaanbaatar, and $60 million in cofinancing from the European Investment Bank.

Upgrades under the project’s first stage will benefit 200,000 households through improved access to services and jobs. Key goals include providing better access to water, sanitation, and heating for half the population of the targeted areas by 2024, and contribute to a 30% reduction in city-wide poverty by 2028.

“Urban planning is new to Mongolia. This project will help us avoid the mistakes of the past.”

Boloroo Nayanbaatar

“The existing infrastructure has already reached maximum capacity to provide services,” says Boloroo Nayanbaatar, a monitoring and evaluation specialist with the project in Ulaanbaatar. “Urban planning is new to Mongolia. This project will help us avoid the mistakes of the past.”

The pressing need for decent housing will be met through another ADB-financed project aiming to construct 10,000 eco-friendly apartments and transform ger areas into eco-districts. Most importantly the housing units built will be affordable, thanks to a $50 million grant and $95 million loan administered by ADB from the Green Climate Fund. An $83 million loan and grant under ADB’s Green Affordable Housing and Resilient Urban Renewal Project will be used to lower the cost of construction and provide mortgages at lower than market rates.

Stimulating small business, creating jobs

As higher land values and better services push up the cost of living, residents will need higher incomes to make ends meet.

So, a longer-term aim of the project is to turn under-resourced subcenters into hives of business activity. Infrastructure to connect to the central heating system, under construction at the suburb of Bayankhoshuu near Bazarsad’s house, will supply heating to the neighborhood for the first time.

That will be life-changing for small-businesspersons like Enkhbayar Gaanjuurjav. In winter she shutters her workshop making iron fences. “I employ four people but in winter they’re unemployed because it’s too cold to work,” she says. “If I had heating I’d work through the winter.”

There will also be a kindergarten at the site, and a business incubator providing small business training.

“As soon as infrastructure is there, it will attract private and public investment and create an enabling environment for thriving communities,” says ADB’s Heckmann, who leads both the infrastructure and housing projects. “We want to show that the ger areas are not a problem, but an opportunity.”

Beating air pollution is critical. Even indoors, Namuuntsetseg Baasansuren can’t escape the pollution. The low-grade raw coal she burns on an old stove in her ger keeps her family warm, but its dust fills the air.

“Over the past decade living conditions have become much worse,” she says. “There are three children in our ger and they’re always coughing.”

Globally, air pollution kills 7 million people a year according to the WHO, most of them in developing countries. Dirty air worsens inequality, smothering opportunities for poor families who often live and work in highly polluted areas and can’t afford good medical care. Children and the elderly are vulnerable to cardiovascular and respiratory ailments caused by pollution.

A study by the Millennium Challenge Corporation found the economic costs of air pollution in Ulaanbaatar ranged from an estimated 18% to 28% of its potential gross domestic product, and Mongolia between 8% and 13%.

“We want to show that the ger areas are not a problem, but an opportunity.”

Arnaud Heckmann

Easing these burdens is a government priority, and progress is being made. The National Program for Reducing Air and Environmental Pollution, 2017–2025, aims to reduce air pollutants by 80%, prohibit the use of unprocessed coal except at thermal power plants in Ulaanbaatar, and cut air and environmental pollution by at least 50% by 2025.

To support the government’s efforts, ADB has extended a $130 million loan to Mongolia with disbursement linked to progress on improving pollution regulations, administering more vaccinations against pneumonia, installing air filters at schools and hospitals, and using clean heating and transport fuels.

Policy reforms under the program include modifying the excise law to provide tax incentives for cleaner transport fuels, and new national standards for electric heaters.

“Better policies are crucial for Ulaanbaatar’s air to get clean and stay that way,” says Maria Pia Ancora, a climate change specialist at ADB who leads the Ulaanbaatar Air Quality Improvement Program. “Fixing the urban infrastructure will bring long-lasting benefits not only for people’s health but for their overall quality of life.”

Apartment ambitions

Bazarsad Namkhai knows he is adding to the pollution by burning low-grade coal in his battered old stove.

But he is optimistic that he’ll be able to throw out his stove soon. He looks forward to central heating and sewage connections. A road being built next to his house under the ger development project will cut dust pollution.

But it’s the prospect of an apartment that really excites him. “The plan sounds realistic to me, and I’m keen to live in an apartment. It will be just like living in the middle of the city.”

John Larkin is a Senior External Relations Specialist in ADB’s Department of Communications. Gantuya Ganzorig is the External Relations Officer at the ADB Mongolia Resident Mission. Learn more about ADB’s work in Mongolia.