From Scarcity to Innovation: Mongolia’s First Water Recycling System Powers Livelihoods

Mongolia faces growing pressure on its water resources as rapid urbanization, industrial demand, and climate variability strain already limited supplies. In Ulaanbaatar, home to nearly half the country's population, groundwater remains the city's primary water source, yet aquifers are being depleted faster than they can recharge.

Bayanzurkh is Ulaanbaatar's most densely populated district where winter temperatures routinely fall below -30°C. Amgalan Heating Plant provides heat to thousands of households, schools, hospitals, and businesses in the Bayanzurkh district. Reliable heating is not only an operational necessity; it is a matter of public safety, job security and urban resilience. By securing the water supply of the Amgalan Thermal Plant, heating reliability is improved for Bayanzurkh's 12,000 households, 14 schools[1], hospitals, and businesses, while supporting jobs, livelihoods and environmental sustainability.

Declining groundwater availability is already undermining the heating system that sustains daily life during Mongolia's harsh winters-making water security and resilience a critical priority. As groundwater levels decline, the plant's long-term water security has become uncertain, placing the reliability of heating at risk in the coldest capital city in the world.

Working in Partnership to Turn Wastewater into a Reliable Resource

To address this challenge, the World Bank facilitated technical assistance to explore Mongolia's first industrial-scale water recycling scheme, an innovation that would reduce pressure on fragile groundwater sources while stabilizing water supply for district heating.

This effort brought together the Amgalan Thermal Plant, MCS Coca-Cola LLC-one of Mongolia's largest beverage producers and a subsidiary of The Coca-Cola Company-and government partners to assess how treated wastewater could be safely reused for industrial operations. With World Bank support, the partners evaluated technical feasibility, energy efficiency, regulatory requirements, and operational models to determine how water reuse could be implemented in practice.

"This joint project with the Amgalan Thermal Plant utilizes treated wastewater as a strategic resource and contributes to the protection of groundwater," said Luvsandash Myagmarjav, Chief Executive Officer of MCS Coca-Cola." With government support, the private sector has taken the lead, demonstrating its ability to make a real contribution in strengthening heating supply for thousands of households."

Earlier reforms backed by the World Bank's 2030 Water Resources Group (2030 WRG) helped pave the way for water recycling in Mongolia. 2030WRG brought together stakeholders to push for updates such as the polluter-pays rule, new wastewater reuse standards, and pilot projects-making it easier to scale up water solutions nationwide.

"Nearly all of Ulaanbaatar's water consumption relies on groundwater. Reusing treated wastewater for heating can reduce freshwater use and improve the reliability of heating in the world's coldest capital city. This project, based on a public-private partnership, demonstrates innovation as well as social and economic benefits," said Myagmar Munkhuu, Executive Director for Amgalan Thermal Plant.

Global Best Practices Accelerating Mongolia's Water Transformation

A key driver of progress was the effective use of global knowledge and long-term capital. MCS Coca-Cola drew on the Coca-Cola system's decades of global experience in water stewardship and reuse, contributing technical insight that helped shape a solution suited to Mongolia's operating context. In parallel, Mongolian institutions benefited from sustained World Bank engagement, including technical support from Korean experts with extensive experience integrating advanced water reuse technologies into industrial operations. Moreover, IFC, the WBG's private sector arm, has provided financing to MCS Coca-Cola and its group companies in Mongolia to support various sustainable projects over about two decades.

"Mongolia's water recycling initiative represents an important step in strengthening the country's water security," said James Tay, Senior Water and Sanitation Specialist at the World Bank. "This initiative demonstrates that water recycling is feasible in Mong0lia, and that the public and private sectors can come together to achieve beneficial outcomes for the community."

By combining Mongolian leadership with global and Korean expertise, the partners were able to refine system design, manage energy costs, strengthen public-private coordination, and move from concept to construction far more rapidly than would otherwise have been possible.

Results: A Resilient Solution That Can Be Scaled

Construction of the Amgalan Water Recycling Scheme is now complete. Once operational, it will recycle around 138,000 cubic meters of wastewater annually. This will ease pressure on groundwater, reduce the load on Ulaanbaatar's overstretched central wastewater treatment plant, and provide a stable, climate-resilient water source for district heating. Improvements on heating reliability will benefit the residents of Bayanzurkh connected to the district's heating supply.

A Replicable Model for Public-Private Partnership

The Amgalan Thermal Plant and MCS Coca-Cola partnership shows how public and private sectors can team up for smart water solutions, driven by strong government leadership in establishing strong legal frameworks.

Beyond infrastructure, the initiative has enhanced Mongolia's ability to apply global innovations locally. With World Bank support, stakeholders gained hands-on experience for future water initiatives.

As operations begin, Mongolia is launching a transformational system that protects scarce freshwater resources, secures reliable district heating, and enhances urban resilience. Early technical groundwork, supported by financing from the Korean Green Growth Trust Fund (KGGTF), helped shape this first-of-its-kind investment. A policy paper outlining regulatory pathways needed to scale industrial water recycling nationwide has been published.

In addition to these technical and policy advancements, new financing solutions are also emerging. In 2025, IFC provided its first blue loan in the country to Golomt Bank, which will channel the financing toward projects that enhance water efficiency, strengthen fund projects that improve water efficiency, water management, and supply, in line with IFC's Guidelines for Blue Finance.

Between 2024 and 2025, Golomt Bank provided $6.4 million in water related financing and, in 2025, was recognized as a "Water Ambassador Bank" by the Water Agency of Mongolia.

Under its partnership with IFC, Golomt Bank introduced more blue finance products including a dedicated water reuse and treatment loan, to further scale up its contribution to Mongolia's sustainable water resource management.

"As a landlocked country with an extreme continental climate, Mongolia faces unique water-related challenges, further amplified by rapid urbanization and limited water resources," said Matthieu Le Blan, IFC's Resident Representative for Mongolia. "At the same time, these challenges call for investments in innovative water management and infrastructure projects. We are working with Mongolian banks and companies to channel more private capital into the country's water sector-boosting resilience, protecting nature resources, and improving people's livelihood."

The Amgalan Water Recycling Scheme offers a clear, replicable example of what is possible when local leadership, global expertise, and innovative partnerships come together to tackle urgent development challenges, delivering lasting solutions for cities under increasing water stress.