Jing, Lian; S au e mann, Pe e ; Kuma , Ronald Ra inesh
A icle
How he ou ism indus y can help esol e Mongolia's
en i onmen al p oblems
Economies
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MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: Jing, Lian; S au e mann, Pe e ; Kuma , Ronald Ra inesh (2025) : How he ou ism
indus y can help esol e Mongolia's en i onmen al p oblems, Economies, ISSN 2227-7099, MDPI,
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Published: 27 Feb ua y 2025
Ci a ion: Jing, L., S au e mann, P. J., &
Kuma , R. R. (2025). How he Tou ism
Indus y Can Help Resol e
Mongolia’s En i onmen al P oblems.
Economies,13(3), 64. h ps://doi.o g/
10.3390/economies13030064
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A icle
How he Tou ism Indus y Can Help Resol e Mongolia’s
En i onmen al P oblems
Lian Jing 1, Pe e J. S au e mann 1,* and Ronald Ra inesh Kuma 2
1Depa men o Global Business & Economics, Changwon Na ional Uni e si y,
Changwon-si 51140, Gyeongsangnam-do, Republic o Ko ea; [email p o ec ed]
2Depa men o Economics and Finance, The Business School, RMIT Uni e si y, Saigon Sou h Campus,
702 Nguyen Van Linh, Dis ic 7, Ho Cho Minh Ci y 700000, Vie nam; [email p o ec ed]
*Co espondence: [email p o ec ed]
Abs ac : In his pape , we use a heo e ical model o show ha he de elopmen o he
ou ism indus y is e y likely o signi ican ly educe en i onmen al p oblems in Mongolia.
Among o he issues, Mongolia su e s om an excessi ely la ge li es ock popula ion,
which causes conside able en i onmen al damage. In pa icula , he excessi e li es ock
popula ion leads o he dese i ica ion o he Mongolian s eppe, and he emissions o
me hane and ni ogen dioxide caused by he li es ock con ibu e signi ican ly o Mongolia’s
g eenhouse gas emissions. Ou app oach essen ially elies on c ea ing jobs in he g owing
ou ism indus y o hose employed in ag icul u e, using app op ia e economic ools. The
consequences o such a change include dec easing en i onmen al damages. Pa icula ly, we
analyze h ee policy measu es, en i onmen al axes, lump-sum con ibu ions o ho els o
inance ad e ising, and a ax on p o i s, o inance ad e ising expendi u es. To suppo ou
heo e ical esul s, we show, using a ailable da a ha i is e y plausible o conclude ha
he GHG emissions caused by addi ional ou ism a e a less han he GHG emissions likely
o be sa ed by ou economic policy ecommenda ions. This pape shall help economis s
and in e es ed policymake s o unde s and how he de elopmen o ou ism can educe
en i onmen al damages.
Keywo ds: ou ism indus y; Mongolia; g eenhouse gas emissions; dese i ica ion; ou ism
economics heo y; ou ism policy
1. In oduc ion
Tou ism as a means o mi iga e en i onmen al damage and g eenhouse gas (GHG)
emissions is a opic o g owing in e es . Th ough a case s udy on Mongolia, his pape
aims o demons a e how p omo ing ou ism can educe en i onmen al impac and GHG
emissions. By ocusing on he excessi e li es ock popula ion in Mongolia con ibu ing o
dese i ica ion and me hane emissions, we will explo e he po en ial o ou ism o os e
sus ainable de elopmen . The e o e, i is he aim o his pape is o show ha ou ism can
educe en i onmen al damage and g eenhouse gas (GHG) emissions. Mongolia su e s
om an excessi e quan i y o li es ock, which causes he dese i ica ion o as a eas o
he coun y. Addi ionally, he la ge numbe o li es ock emi s a signi ican amoun o
me hane (CH
4
), a highly po en g eenhouse gas. Con e sely, Mongolia has a small bu
apidly g owing ou ism indus y. This pape ’s p ima y goal is o show ha p omo ing
he ou ism indus y h ough app op ia e policy measu es will expand he ou ism sec o ,
educe he ag icul u al sec o , and consequen ly dec ease he numbe o li es ock.
Economies 2025,13, 64 h ps://doi.o g/10.3390/economies13030064
Economies 2025,13, 64 2 o 24
Ou heo e ical app oach is based on he wo k o S au e mann and Kuma (2017a,
2017b), who de eloped a model o monopolis ic compe i ion in he hospi ali y indus y.
This model is ex ended by in eg a ing he ag icul u al sec o . The second aim o his
pape is o highligh a possible mechanism h ough which inc easing ou ism—despi e
being associa ed wi h signi ican emissions (Gössling,2013) mainly om anspo a ion
(Gössling & Humpe,2020)—may educe a coun y’s o al emissions. Se e al empi ical
s udies (e.g., Lee & B ahmas ene,2013;Azam e al.,2018;Alam & Pa ama i,2017) ha e
concluded ha ou ism educes CO
2
emissions. Howe e , hese empi ical s udies do
no p o ide a plausible a gumen explaining how his educ ion occu s, as ou ism is
associa ed wi h signi ican emissions o GHGs. This is o some ex en dissa is ying, because
he me e p esence o a s a is ical ela ionship wi hou heo e ical o in ui i e easoning is
no con incing. The e o e, one mo i a ion o his pape is o ill his gap and p esen a
heo e ical ounda ion o how ou ism can con ibu e o he educ ion o GHG emissions.
As ou s udy shows, i is possible o ou ism o educe emissions i he ou ism indus y
displaces exis ing indus ies ha a e less eco-e icien . The e o e, whe he ou ism educes
emissions depends on which indus ies a e displaced by ou ism. Consequen ly, i is no
su p ising ha di e en s udies (e.g., Gössling,2002;Azam e al.,2018;Pa ama i e al.,
2016;Pa ama i e al.,2017) in es iga ing he en i onmen al consequences o ou ism come
o con adic o y esul s, because he impac depends on which o he indus y sh inks o is
displaced as a esul o g owing ou ism.
In gene al, i can be s a ed ha ag icul u e is he mos eco-ine icien indus y in
e ms o g eenhouse gas (GHG) emissions pe dolla , pa icula ly i i is based mainly
on animal husband y due o he me hane (CH
4
) and ni ous oxide (N
2
O) emissions om
li es ock. The e o e, i ou ism is able o educe and subs i u e li es ock a ming as a
sou ce o income, ou ism will help o educe GHG emissions o a coun y, al hough i is
plausible ha wi h a g ow h in ou ism ac i i ies, GHG emissions would inc ease. In an
ideal wo ld, he de eloping ou ism indus y would be a o m o so-called sus ainable
ou ism, bu his is un o una ely o en mo e a desi e han eali y. Howe e , we a gue
ha e en when con en ional ou ism is aken in o accoun , including ligh emissions, a
coun y’s g eenhouse gas emissions can be educed.
Thus, in his pape , we i s p o ide a backg ound based on economic and en i on-
men al da a ela ed o Mongolia (in Sec ion 2). F om he ac s no ed, i becomes clea
ha e e y dolla o alue added in he ou ism indus y is associa ed wi h much lowe
emissions han a dolla o alue added in he ag icul u al sec o . In Sec ion 3, we will in o-
duce a heo e ical model ha desc ibes an economy consis ing o wo indus ies: ou ism
and ag icul u e. In Sec ion 4, we show ha he go e nmen can shi economic ac i i ies
om he ag icul u al sec o o he ou ism indus y h ough app op ia e economic policy
measu es. In he con ex o Mongolia, his means i is possible o educe he ag icul u al
sec o and enhance he ou ism indus y, esul ing in lowe emissions, educed soil e osion,
and inc eased income. These indings ha e impo an implica ions o en i onmen .
No ing he lack o scien i ic s udies on ou ism in Mongolia, we ha e me ged he key
li e a u e ha we could ind wi h he sec ion on backg ound (Sec ion 2). The li e a u e
s udies we p esen a e gene ally om a ious in e na ional o ganiza ions, such as he Wo ld
Bank, he In e na ional Mone a y Fund, and Japanese De elopmen Aid. The in en ion o
hese epo s is ei he o show ways o educe he numbe o li es ock and a he same ime
imp o e he quali y o he inal ag icul u al p oduc s (imp o ed wool and mea quali y) o
simply o imp o e he e iciency o ou ism.
The es o he pape is o ganized as ollows. In he nex sec ion, we p esen he ele an
ac s on he en i onmen , economy, and ou ism indus y in Mongolia. In Sec ion 3, we
in oduce he economic model; we conside he ag icul u al sec o in Sec ion 3.1, de e mine
Economies 2025,13, 64 3 o 24
he en i onmen ally sus ainable numbe o goa s in Sec ion 3.2, p esen he demand o
ou ism in Sec ion 3.3, and in oduce he supply side o he ou ism indus y in de ail and
de e mine he ma ke equilib ium o his wo-sec o economy in Sec ion 3.4. In Sec ion 4,
we analyze he model in ou subsec ions wi h espec o g owing demand o ou ism,
en i onmen al ax on goa s, lump-sum con ibu ions o ho els o inance ad e ising o
ou ism, and a p o i ax on ho els o inance ad e ising o ou ism. In Sec ion 5, we discuss
ou esul s and he limi a ions o he s udy, and in Sec ion 6we p o ide concluding ema ks.
2. En i onmen al and Economic Backg ound o Ag icul u e and Tou ism
in Mongolia
In his sec ion, we will calcula e and compile some s a is ical indica o s ha a e
impo an o ou pu poses. Howe e , he exis ing da a published by he s a is ical o ice
o Mongolia, he Wo ld Bank, he Wo ld T a el and Tou ism Council, and he UN Wo ld
Tou ism O ganiza ion on Mongolia a e no cohe en and pa ly con adic o y. Ne e heless,
i is impo an o ou pu poses o demons a e ha he ou ism indus y is mo e eco-
e icien and mo e p oduc i e han he ag icul u al sec o .
Mongolia, a landlocked coun y well-known o i s as s eppes and nomadic cul u e,
is acing a se e e en i onmen al c isis due o dese i ica ion (Han e al.,2021;Lamchin e al.,
2016;H.L.Zhao e al.,2005;Wang e al.,2024;Sainnemekh e al.,2022;Y.Zhao e al.,2023).
Dese i ica ion is he p ocess by which e ile land becomes dese . The easons a e ypically
d ough , de o es a ion, o inapp op ia e ag icul u e. In Mongolia, his phenomenon has
been exace ba ed by a huge inc ease in li es ock o e he las 50 yea s. Shyndaulye (2023)
s a es ha he numbe o li es ock has inc eased om 22.5 million in 1970 o 67.1 million in
2021. This inc ease in a m animals has led o signi ican en i onmen al and socio-economic
challenges. Acco ding o Shyndaulye (2023), 76.9% o he land is a ec ed by he s ong
inc ease in li es ock as well as by clima e change leading o land deg ada ion. Fo example,
be ween 2019–2020, a ound 2000 su ace wa e sou ces ha e d ied up, bu ewe han
1000 wa e sou ces ha e been es o ed.
A main eason o hese de elopmen s is o e g azing and de o es a ion. O e g azing
by li es ock has esul ed in he deg ada ion o g asslands, which a e essen ial o main-
aining soil s abili y and p e en ing e osion. De o es a ion, mos ly d i en by he need o
uelwood and ag icul u al land, has u he dec eased ege a ion co e , lea ing he soil
exposed o wind e osion. Acco ding o Han e al. (2021), he coun y has expe ienced a sig-
ni ican inc ease in empe a u e and a dec ease in p ecipi a ion in ecen decades. Be ween
1940 and 2015, he annual mean ai empe a u e in Mongolia inc eased by 2.24
◦
C, while
annual p ecipi a ion dec eased by 7%. The consequences o dese i ica ion in Mongolia a e
mani old. The loss o e ile land has esul ed in dec ease ag icul u al p oduc i i y, and he
equency o sands o ms has inc eased. These sands o ms a e also nega i ely impac ing
he ai quali y in China, Japan, Sou h Ko ea and he USA signi ican ly by inc easing he
concen a ion o PM
10
and PM
2.5
pa icles. This so called “Yellow dus ” educes isibili y,
causes espi a o y heal h issues, and leads o damage o c ops and soil due o he indus ial
pollu an s, hea y me als, and o he ha m ul subs ances i ca ies in he a ec ed coun ies.
Lkhag ado j e al. (2013a,2013b) conduc ed a su ey on he de s’ li elihood, and no e
ha he de s a e awa e o he en i onmen al p oblems bu hey do no see an al e na i e
way o ea n income. D awing insigh s om B own (2020), Kimu a e al. (2022) s a e ha
li es ock needs o be educed by 50% o allow g asslands o eco e om damage. Simila ly,
he In e na ional Mone a y Fund (IMF,2019) p oposes educing li es ock by 50%. Bo h
sou ces a gue ha his is necessa y no only o e u n o ecological sus ainabili y bu also o
inc ease p oduc i i y in he li es ock sec o .
Economies 2025,13, 64 4 o 24
Ano he p oblem ela ed o excessi e li es ock is ha he ag icul u al sec o , whe e
90% o i is ela ed o li es ock a ming, is esponsible o a ound 50% o Mongolia’s
g eenhouse gas (GHG) emissions (Kimu a e al.,2022). Mongolia’s GHG emissions a e
ela i ely high, wi h mo e han 17 ons pe capi a pe yea in 2019 (Wo ld Bank,2024). In
o he wo ds, Mongolia is esponsible o 0.1% o wo ldwide GHG emissions, while i s
sha e o he wo ld popula ion is only 0.0004%. Jones e al. (2023) no e ha GHG emissions
pe capi a amoun ed o 31.5 ons and 27 ons pe capi a in 2019 and 2023, espec i ely.
Acco ding o he Wo ld Bank (2024), he con ibu ion o ag icul u e o GDP was 10%
in 2023, and 26% o he labo o ce is engaged in ag icul u e. The ag icul u al sec o is
esponsible o a ound 51% o he o al GHG emissions (Mongolia,2023), which means he
sec o emi ed a o al o 22.39 million ons o GHG gases, and i s mone a y con ibu ion o
GDP was US Dolla s (USD) 2.03 billion.
Mo eo e , he GWP (g eenhouse wa ming po en ial) alue o 21 o me hane, as
p oposed by In e go e nmen al Panel on Clima e Change (IPCC) (1995) in 1995, is e y
low. Conside ing he a ge s se in he Pa is Ag eemen , a c edible GWP o 80 would be
adequa e (e.g., Howa h,2024) because o he sho e ime ho izon o 20 yea s. I he la e
GWP
20
alue is used, he emissions om ag icul u e would amoun o nea ly 70 million
ons o GHGs.
Ne e heless, based on he low GWP
100
o 21, he ag icul u al sec o emi s 11 kg o GHG
gases pe USD. The na ional a e age alue o Mongolia’s eco-e iciency (kg GHG/USD) is
2 kg pe USD. A ound 312,000 people wo k in he ag icul u al sec o , bu he dis ibu ion
o li es ock is e y unequal. The median he de amily’s li es ock amoun s o 91 animals,
while he iches 1% o amilies own abou 1835 animals (IMF,2019). The weigh ed a e age
GHG emissions pe li es ock pe yea is 369 kg (based on au ho es ima ion). Howe e , i
he numbe o li es ock we e educed by 50%, we could expec a dec ease o 11 million
ons o GHG pe yea , which will also esul in abou USD 1 billion loss in alue added
and 156,000 jobs. F om hese es ima ions, he alue added pe he de would be a ound
USD 6500.
As no ed ea lie , he aim o his s udy is o show ha he p omo ion o ou ism will
educe en i onmen al damages, pa icula ly by educing GHG emissions. Un o una ely,
he e is no da a a ailable ha p esen s he GHG emissions o ou is s o ou ism indus y.
Gössling e al. (2005) s a e ha 60~95% o he GHG emissions gene a ed by ou ism a e
caused by anspo , wi h ligh s being he bigges con ibu o s o anspo - ela ed emis-
sions. The case s udies p esen ed by Gössling e al. (2005) and Pe ch-Nielsen e al. (2010)
con i m ha a de ailed es ima ion o GHG emissions and expendi u es o ou is s is e y
complex, ime-consuming, and some imes no sa is ac o y. The p oblems associa ed wi h
calcula ing en i onmen al-economic indica o s o ou is s s em om he incompa ibili y o
economic and en i onmen al da a on ou ism, and in many espec s su e s om a p oblem
o missing da a. A con incing example o how o accoun o he economic side o ou ism
is p o ided by Van de S eeg (2009), who cons uc ed a ou ism sa elli e accoun o A uba.
Hence, a compa ible en i onmen al sa elli e accoun could also be cons uc ed, bu i is
manda o y o ha e access o all da a om he s a is ical o ice.
To add ess issues ela ed o da a and de elop a meaning ul analysis, we ha e o
es ima e hese emissions based on a simple and p agma ic app oach. Hence, in his s udy,
we p esen an es ima e o he associa ed GHG emissions by assuming ha he a e age
ou is emi s as much as a domes ic ci izen, plus he emissions caused by he ligh s o isi
Mongolia. Usually, he emissions caused by in e na ional ligh s a e no conside ed in he
analysis, al hough hey a e p obably he mos impo an con ibu o o he GHG emissions
o in e na ional ou ism. The simple eason is ha in e na ional ligh s a e no ep esen ed
in he na ional en i onmen al accoun s o any coun y. To calcula e hese emissions, we
Economies 2025,13, 64 5 o 24
ha e used he da a collec ed by Shimizu (2021) and GHG emissions o ligh s de i ed
om A mos ai ’s GHG calcula o (h ps://www.a mos ai .de/en/o se / ligh / (accessed
on 24 Feb ua y 2025)). The me hod used by A mos ai gGmbH (2021) mee s scien i ic
s anda ds and calcula ions can be eplica ed. In Table 1, we ha e aken in o conside a ion
he emissions o he a e age ai plane ype used on he ollowing ligh connec ions:
Table 1. Emissions om ligh s.
F om To
GHG
Emissions pe
Passenge in
Ton
Numbe o
Passenge s
To al GHG
Emissions in
Tons
Ulaanbaa a Seoul 0.393 3,877,440 428,065
Ulaanbaa a Tokyo 0.528 79,118 127,064
Ulaanbaa a Beijing 0.295 214,428 143,667
Ulaanbaa a Hongkong 0.5041 88,664 135,833
Ulaanbaa a Is anbul 1.741 41,380 144,085
Ulaanbaa a F ank u 1.978 27,000 106,812
Ulaanbaa a I ku sk 0.628 14,239 5098
Ulaanbaa a Busan 0.423 64,637 81,184
Ulaanbaa a K asnoya sk 1.045 106,703 223,009
Sum: 1,023,999 1,394,817
Sou ce: Own calcula ions based on A mos ai calcula o and Shimizu (2021).
Table 2co e s 86% o all in e na ional ligh passenge s who isi ed Mongolia in 2019.
The o al quan i y o GHG emissions amoun ed o 1.39 million ons. Due o he di e ences
in GHG emissions o ou is depa ing om di e en coun ies, we calcula e he a e age
GHG emissions pe capi a o he a ious na ionali ies. In gene al, he consump ion pa e n
and he e o e he emission pa e n o ou is s may de ia e d as ically om ha o na ionals,
as was no ed by Rose (1966), McDonald e al. (2009), Gössling (2001), o Cha a a e al.
(2010), o Tou ism Conce n (2012). Ne e heless, we assume ha is no he case ega ding
ou ism in Mongolia, and he e o e we assume ha ou is s beha e simila ly o Mongolians
ega ding GHG emissions and calcula e he GHG emissions pe capi a and pe day o s ay
as 0.058 ons. Acco ding o Shimizu (2021), 70% o ou is s isi ed Mongolia in he season
om Ap il o Sep embe , whe e he empe a u es ange be ween 18 o 32 deg ees Celsius, so
ha ou is s do no signi ican ly con ibu e o emissions caused by hea ing sys ems. Fu he ,
ou is s a e no esponsible o me hane emissions caused in ag icul u e. Addi ionally,
mos ou is s a e in he age g oup be ween 24 o 39 yea s (Shimizu,2021), gene ally an
age g oup whe e people ypically ha e a es ic ed a el budge . The majo i y o ou is s
spend hei ime wi h na u e and wildli e ou s, cul u al ou s, isi s o na ional pa ks,
Gobi Dese ad en u es, ho seback iding, and camel iding. Rega ding hese ac i i ies, he
ou is s li e mos ly in one o he 450 ge camps oge he wi h Mongolians. Mongolia has
430 ho els, bu only eigh 5-s a s ho els and 23 4-s a s ho els, and only one 4-s a ho el is
loca ed ou side Ulaanbaa a , in U u khangai aimag. This implies ha he e is nea ly no
high-end ou ism in Mongolia. The e o e, we hink ha he simpli ying assump ion ha
ou is s emi GHG as much as na ionals is jus i ied.
Economies 2025,13, 64 6 o 24
Table 2. GHG emissions o ou is s.
Coun y Coun y A . Days
o S ay
GHG
Emissions
o S ay
Fligh
Emission
GHG Tons
Expendi u e
in Mongolia
in USD
(2019)
To al GHG
Tons
Emissions
pe Tou is
GHG kg
pe USD
China 168,258 8 8 1.14 1850 1.51 0.91
Russia 141,927 16 16 0.76 820 1.50 1.49
S. Ko ea 101,279 11 11 0.59 1223 1.10 1.31
Japan 24,419 7 7 1.28 1070 1.60 1.57
Eu ope 27,194 12 12 1.6 1250 2.16 1.83
Sou ce: Own calcula ions, based on Shimizu (2021).
O cou se, his is a jus an es ima e and we may o e es ima e o unde es ima e he
quan i y, bu he ou come coincides closely o he ou come o ou ism a he global a e age
calcula ed ecen ly by Sun e al. (2024).
Using he numbe s om Table 2 o calcula e he o al GHG emissions o ou ism, we
ind ha Mongolia’s in e na ional ou ism is esponsible o he emissions o 1.55 million
ons o GHG gases. Based on he expendi u es de i ed om in e iews (Shimizu,2021),
he alue added by ou is s amoun ed o USD 1.38 billion in 2019, which exceeds he
es ima ions (USD 707 million) o he Wo ld T a el and Tou ism Council (WTTC) by a ound
100%. Acco ding o he Wo ld Bank, in e na ional eceip s summed up o USD 605 million.
I is, o cou se, possible ha he in e iewed ou is s made inco ec es ima ions ega ding
hei own spending, bu i is also possible ha hey spen money on a numbe o goods
and se ices no o icially accoun ed o . The e o e, he calcula ions and es ima ions made
mus be aken wi h some cau ion.
Now, calcula ing he eco-e iciency (GHG emissions in kg/USD) o ou ism om he
quan i ies calcula ed abo e, we ob ain a alue o 1.21 kg/USD. As indica ed abo e, he
la e alue is e y close o he 1.35 kg GHG/USD, which is calcula ed by Sun e al. (2024)
as he global le el o GHG emissions pe USD alue added o ou ism. I we ake he
numbe s o alue added p o ided by WTTC and he Wo ld Bank, we ob ain 2.37 kg/USD
and 2.76 kg/USD, espec i ely.
Howe e , o ou pu poses, i does no ma e so much which alue is aken; he
mos impo an poin is ha he eco-e iciency o he ou ism indus y is much be e
han ha o he ag icul u al sec o , wi h 11 kg/USD. This is an impo an esul because
ou model p oposes ha jobs in ag icul u e should be subs i u ed by jobs in he ou ism
indus y. The cu en numbe o jobs in he ou ism indus y in Mongolia is also no
well documen ed. Fo ins ances, he Wo ld Bank (2021) s a es he e we e 105,488 jobs
in he ou ism indus y in 2019, he WTTC assumes 88,000 jobs, and he Wo ld Tou ism
O ganiza ion a ound 60,000 jobs. These numbe s e lec he di icul y in making use ul
s a emen s abou he ou ism indus y. Howe e , conside ing ou ism’s o al alue added
o a ound USD 1 billion (in e na ional and na ional ou ism) s a ed by WTTC (2024) se ious,
hen he alue added pe capi a anged be ween USD 9523 and USD 16,666 pe capi a
in 2019. Bo h alues signi ican ly exceed he alue pe capi a in he ag icul u al sec o
(USD 6500). Acco ding o ou calcula ions, a job in ag icul u e is associa ed wi h a alue
added pe pe son o USD 6500 and a ound 71.5 ons o GHG (using GWP100 o 1995), while
a pe son wo king in he ou ism indus y is associa ed wi h a alue added o USD 16,600
and a ound 45 ons o GHG. E en i we assume ha he alue added in ag icul u e is
unde es ima ed and GHG emissions a e o e es ima ed, and he opposi e ega ding he
Economies 2025,13, 64 7 o 24
ou ism indus y, i is ob ious ha subs i u ing a job in ag icul u e wi h a job in he ou ism
indus y will lead o an inc ease in alue added and a educ ion in GHG emissions.
As no ed ea lie , educing he numbe o li es ock by a ound 50% is associa ed wi h
a loss o a ound 156,000 jobs. I he ou ism indus y is o subs i u e all hese jobs, i
is necessa y o i o g ow by a ac o o 2.5 o 3, which is achie able conside ing ha
Mongolia expe ienced a 49% g ow h o isi o s be ween 2015~2019 (Wo ld Bank,2021).
When conside ing simila coun ies like Kazakhs an, he Ky gyz Republic, o Tajikis an,
hese coun ies ha e a much highe numbe o isi o a i als and a much highe a io
o a i als pe capi a. The a i als pe capi a in Mongolia is only 0.2, while i is 0.5 in
Kazakhs an and 1.3 in he Ky gyz Republic (Wo ld Bank,2021).
3. A S ylized Model o Tou ism and Ag icul u e
In his sec ion, we in oduce he economic model, which is based on s anda d economic
assump ions. The model encompasses wo economic sec o s on he supply side: ag icul u e
and ou ism, and on he demand side, he demand o in e na ional ou is s. In Sec ion 3.1,
we model he ag icul u al sec o ; in Sec ion 3.2, we de e mine he op imal numbe o a m
animals; in Sec ion 3.3, we model he demand side; and in Sec ion 3.4 and i s subsec ions,
we model he ou ism supply and de e mine he ma ke equilib ium.
3.1. Ag icul u al Sec o
Mongolia’s ag icul u al sec o is cha ac e ized by he de s who mo e a ound he
Mongolian s eppe o eed hei animals (ho ses, camels, yaks, sheep, and goa s). The
majo i y o he animals a e goa s used o p oduce cashme e wool, and he e o e we assume
all animals o he de s ocus on goa s. Le us assume ha each heade is using a Cobb–
Douglas p oduc ion unc ion depending on he numbe o goa s and a ailabili y o biomass
S. Then, he p oduc ion o cashme e wool qwpe he de can be desc ibed by:
qw=D(S)gγ(1)
whe e
D(S)≥
0,
D′(S)≥
0 and 0
<γ<
1. I should be no ed ha he biomass is no
cons an and depends on he clima e, wea he condi ions, and he numbe o goa s and
wild animals consuming g ass, which we e g azed on he land in ea lie yea s. I
D(S)
becomes oo small because o excessi e g ass consump ion in he ecen pas , he p oblem
is ha goa s canno consume enough eed o su i e cold win e s. This happened, o
example, in he yea s 1998–2003 and 2010 and millions o goa s and o he a m animals
s a ed and oze o dea h (IMF,2019); i was es ima ed ha du ing his pe iod, 20% o he
a m animals died. Wi hou any go e nmen in e en ion, he he de de e mines he p o i
acco ding o:
πg=pwqw−cwg=pwD(S)gγ−cwg (2)
whe e we assume ha he uni cos s pe goa
cw
, he e e ina y cos and he cos o
shea ing, and ha he wo ld ma ke p ice o cashme e wool
pw
a e exogenously gi en.
Fu he , we assume ha pw>cw. The esul ing i s o de condi ion is:
γpwD(S)gγ−1−cw=0 (3)
Sol ing o he numbe o goa ’s leads o:
g∗= (γpwD(S)
cw
)
1
1−γ(4)
Economies 2025,13, 64 8 o 24
This means he numbe o goa s is posi i ely in luenced by he p ice o wool and
a ailable biomass in he s eppe, and nega i ely a ec ed by he uni cos s. Acco dingly, he
o al numbe o goa s becomes:
G∗=Lgg∗(5)
whe e Lg ep esen s he numbe o he de s. The p o i pe he de is gi en by:
π∗g=pwD(S)(g∗)γ−cwg∗=pwD(s)
cγ
w1
1−γ(γγ
1−γ−γ1
1−γ)>0, (6)
The p o i pe he de also ep esen s he income o a he de . Un o una ely, he
biomass is apidly declining in he s eppe since he b eakdown o he So ie Union. In
addi ion o he ex emely inc eased numbe o a m animals, i mus be no ed ha he
impac o clima e change on he a e age empe a u e in Mongolia is much s onge han
on he wo ld a e age (IMF,2019); he yea ly a e age empe a u e inc ease in Mongolia
is 0.019 deg ee Celsius since 1940. Acco ding o Meng e al. (2021), 90% o Mongolia is a
isk o dese i ica ion. The e o e, i is impo an o es o e he s eppe o a sus ainable ack.
Hence, in he nex subsec ion we will de e mine he op imal numbe o goa s in he model.
3.2. The Sus ainable Numbe o Goa s
One main en i onmen al issue in Mongolia is ha he cu en numbe o goa s a
exceeds he sus ainable numbe . This leads o o e g azing and dese i ica ion o he
Mongolian s eppe. He e, we in oduce a simple model o de e mine how o achie e a
sus ainable s a e o he Mongolian s eppe. Fo his pu pose, we educe he model o he
main impo an cha ac e is ics ha mus be conside ed ega ding he o e g azing p oblem.
Le us assume ha biomass de elops as ollows:
S +1−S =∆S = S 1−S
Smax −sG , (7)
whe e
S
ep esen s he biomass in pe iod
,
is he na u al a e o g assland’s g ow h,
s
is he a e age quan i y o biomass consumed by a goa , and
G
is he o al s ock o goa s
oaming on he g asslands in pe iod
. I should be no ed ha
and
s
, in eali y, a e no
cons an and hey depend on clima e, ai pollu ion, wild li ing animals consuming g ass,
and o he ac o s. Rega ding he in e p e a ion o he di e ence equa ion, he i s e m
on he RHS ep esen s he egene a ion o g assland and he second e m on he RHS o
he di e ence equa ion he deple ion o g assland. I
S <Smax
, he g assland egene a es,
gi en ha he second e m o he RHS is su icien ly small. I
S =Smax
he g assland
sys em has eached he ca ying capaci y, and i
S ≥Smax
he i s e m on he RHS will
become ze o because o biological easons.1
To keep he s eppe ecological in ac , a i s , we mus de e mine he op imal numbe
o goa s gi en he s a e o he g asslands. Fo his pu pose, we se
∆S
equal o ze o, and
sol e o G . This deli e s:
Gc
= S (Smas −S )
sSmas , (8)
The supe sc ip
c
indica es ha his s ock o goa s will ensu e he s a e o he g asslands
is cons an . I he quali y o g asslands imp o es, wha will be desi able (in eali y) gi en
he cu en s a e o he s eppe is ha he ac ual s ock o goa s has o be less han
Gc
.
Ob iously in eali y, he ecologically de e mined numbe o goa s is less han he p o i
maximizing numbe o goa s (
Gc
<G∗)
, which is de e mined wi hou conside ing he s a e
o he s eppe.
Economies 2025,13, 64 15 o 24
Table 4. Elas ici y o numbe o employees in ou ism.
Numbe o Employees (Change in %)
Inc ease o 1% o Value o Elas ici y η> 1 η< 1
π∗
g−η
η(1−α−β)+α+β<0 <0
Y ε
η(1−α−β)+α+β>0 >0
Pδ(η−1)
η(1−α−β)+α+β>0 <0
m(1−β)(η−1)
η(1−α−β)+α+β>0 <0
κ1
η(1−α−β)+α+β>0 >0
No e: Calcula ed om (31). Sou ce: Own calcula ions.
Table 5shows, an inc easing demand o ou ism caused by inc eased incomes o
ou is s, o mo e ad e isemen o Mongolia as ou ism des ina ion, o an inc ease o
wages will lead o an inc ease o he ou ism good’s p ice. An inc ease o he numbe o
ho els and an imp o ed in as uc u e lowe s he p ice.
Table 5. P ice elas ici y o composi e ou ism good.
P ice o a Tou ism Good (Change in %)
Inc ease o 1% o Value o Elas ici y η> 1 η< 1
π∗
g(α+β)
η(1−α−β)+α+β>0 >0
Y ε(1−α−β)
η(1−α−β)+α+β>0 >0
P−δ
η(1−α−β)+α+β<0 <0
m−(1−β)
η(1−α−β)+α+β<0 <0
κ(1−α−β)
η(1−α−β)+α+β>0 >0
No e: Calcula ed om (30). Sou ce: Own calcula ions.
Table 6shows ha he e enue o he ou ism indus y will undoub edly inc ease
when he demand o ou ism inc eases due o highe ou is incomes o mo e ad e ising
p omo ing Mongolia as a ou ism des ina ion. The e ec s on e enue caused by inc easing
wages, be e in as uc u e, and mo e ho els o ge camps depend on he p ice elas ici y o
demand o ou ism.
Table 6. Elas ici y o e enue o ou ism indus y.
Re enue o a Tou ism Good (Change in %)
Inc ease o 1% o Value o Elas ici y η> 1 η< 1
π∗
g(α+β)(1−η)
η(1−α−β)+α+β<0 >0
Y ε
η(1−α−β)+α+β>0 >0
Pδ(η−1)
η(1−α−β)+α+β>0 <0
m(1−β)(η−1)
η(1−α−β)+α+β>0 <0
κ1
η(1−α−β)+α+β>0 >0
No e: Calcula ed om (37). Sou ce: Own calcula ions.
Economies 2025,13, 64 16 o 24
In gene al, i mus be s a ed ha ou ism des ina ions acing p ice-inelas ic demand
o ou ism ha e he p oblem ha supply side policies (inc easing p oduc i i y o he
ou ism indus y) will esul in declining indus y e enue. In his case, one e ec i e policy
o inc ease indus y e enue and i s con ibu ion o GDP is o in es in ad e ising and
p omo ion o he coun y as a ou is des ina ion. O he wise, he e enue will ha e o
depend solely on he income g ow h o ou is s.
Table 7cla i ies he dependence o ho el p o i s on he p ice elas ici y o demand, i he
elas ici y exceeds 1, supply side policies and declining wages inc ease he p o i s, and i he
demand is su icien ly p ice elas ic, an inc easing numbe o ho els leads o an inc ease o
p o i s o exis ing ho els. The eason o he la e e ec is ela ed o he ac ha mo e ho els
and ge camps imply an inc easing a ie y, which makes he des ina ion mo e a ac i e
and mo e ou is will be willing o isi Mongolia. The inc ease o demand is so huge ha
all ho els will ecei e mo e cus ome s.
Table 7. Elas ici y o p o i o ho els/ge camps.
P o i o a Ho el/ge Camp (Change in %)
Inc ease o 1% o Value o Elas ici y η> 1 η< 1
π∗
g(α+β)(1−η)
η(1−α−β)+α+β<0 >0
Y ε
η(1−α−β)+α+β>0 >0
Pδ(η−1)
η(1−α−β)+α+β>0 <0
κ1
η(1−α−β)+α+β>0 >0
η>1+α
αη<1+α
α
m1+α(1−η)
η(1−α−β)+α+β>0 <0
No e: Calcula ed om (34). Sou ce: Own calcula ions.
4.1. G ow h o he Tou ism Indus y and I s E ec on Ag icul u e
To de e mine how he g ow h o o eign income, which is he main d i e o ou ism
g ow h, in luences he ele an a iables, we assume ha :
Y , +1−Y ,
Y ,
=1+χ=X, (39)
Using his g ow h ac o , he g ow h ac o s o he dependen a iables can be easily
calcula ed. The espec i e g ow h ac o s a e ep esen ed in he ollowing Table 8:
Table 8. G ow h ac o s.
Va iable G ow h Fac o
L∗
TX
ε
η(1−α−β)+α+β
Π∗
h,iX
ε
η(1−α−β)+α+β
p∗
TX
(1−α−β)ε
η(1−α−β)+α+β
X∗
TX
(α+β)ε
η(1−α−β)+α+β
RX
ε
η(1−α−β)+α+β
mmax X
ε
α(1−η)+1
Sou ce: Own calcula ions.
Economies 2025,13, 64 17 o 24
Table 8shows ha employmen in he ou ism indus y will inc ease wi h ising
o eign income. The close he p ice elas ici y o demand is o 0, he highe he g ow h a es
in he ou ism sec o . To de i e he e ec on he ag icul u al sec o , we assume ha he
o al wo king popula ion
L
is g owing wi h a e
gL
. Then, he g ow h a e o he wo ke s
in he ag icul u al sec o gLgbecomes:
gLg=gL−gLT, (40)
whe e he g ow h a e o he labo o ce in he ou ism indus y gLT=Xε
η(1−α−β)+α+β−1.
Conside ing eal numbe s, he popula ion g ow h a e in Mongolia eached a peak o
2.2% in 2017 o e he las 30 yea s, and now i s alue is 1.4%. In con as , i we igno e he
COVID-19 pe iod (as an ou lie ), he ou ism indus y has g own on a e age by a ound
10% yea ly in e ms o isi o s since 1995. The ou ism indus y is g owing much as e
han he Mongolian popula ion, and he e o e he ou ism indus y is a ac ing labo o ce
om he ag icul u al sec o , hence he di e ence (40) becomes nega i e. The sha e o labo
o ce, which is engaged in he ag icul u al sec o has declined om 50% in 1998 o 26% in
2023 (Wo ld Bank,2024). Thus, we can s a e ha he g owing ou ism indus y is eplacing
he ag icul u al sec o , wi h a posi i e impac on he en i onmen .
4.2. An En i onmen al Tax
As no ed ea lie , Mongolia aces wo e y se ious en i onmen al p oblems: a la ge
po ion o i s land is h ea ened by dese i ica ion, and i s pe capi a GHG emissions a e
ex ao dina ily high. Bo h issues a e ela ed o he s ock o animals used in he ag icul u al
sec o . Fo his discussion, goa s will ep esen sheep, ho se, cows, and goa s, as men ioned
ea lie . The mos s aigh o wa d app oach o educing he numbe o goa s o p o ec he
en i onmen is o impose a ax on hem. The e o e, we will analyze he e ec s o he ax
on ag icul u e and he ou ism indus y. A ax a e o
τ
on each goa a ec s he op imal
numbe o goa s, and Equa ion (4) becomes:
g∗
τ=γpwD(S)
cw+τ1
1−γ, (41)
wi h
∈g,τ=∂g∗
τ
∂τ
τ
g∗
τ
=−τ
(1−γ)(cw+τ)<0, (42)
Ob iously, he op imal numbe o goa s pe he de declines wi h an inc easing ax a e.
Pa icula ly, he elas ici y
∈g,τ
indica es ha he e ec is ela i e huge, when he exponen
γ
is ela i ely close o 1. We p esume ha his is p obably he case, because i he exponen
is close o 1, he p oduc ion unc ion o wool pe capi a is almos linea .
Now we will conside he e ec o an en i onmen al ax on he income o he de s.
The pe capi a income wi h he ax becomes:
π∗
g,τ=(1−γ)(pwD(S)) 1
1−γγ
cw+τγ
1−γ
>0, (43)
wi h
∈π∗
g,τ=∂π∗
g,τ
∂τ
τ
π∗
g,τ
=−γτ
(1−γ)(cw+τ)<0, (44)
Economies 2025,13, 64 18 o 24
The elas ici y
∈π∗
g,τ
in o ms us ha he income declines in e ms o pe cen caused
by inc ease o he en i onmen al ax by 1% is smalle han he decline o goa s in e ms o
pe cen . In a las s ep, we calcula e he ax e enue elas ici y. The ax e enue is gi en by:
Tτ=τγpwD(S)
cw+τ1
1−γ, (45)
The elas ici y o he ax e enue wi h espec o he ax a e becomes:
∈Tτ,τ=∂Tτ
∂τ
τ
Tτ
=cw−γ(cw+τ)
(1−γ)(cw+τ)(≥0, i τ≤1−γ
γcw
<0, i τ>1−γ
γcw
, (46)
No su p isingly, he eac ion o he ax e enue’s sign depends on he size o he
ax a e. I he ax a e is ela i ely high, he ax e enue will decline; o he wise, i will
inc ease. Ha ing calcula ed he elas ici ies o he numbe o goa s and income wi h espec
o he en i onmen al ax, we can conside he e ec s o he ax on he ou ism indus y.
Because he ax a e should be de e mined by en i onmen al equi emen s a he han he
goal o maximizing ax e enue, i is ecommended o edis ibu e he ax e enue in a
lump-sum manne o he de s and employees in he ou ism indus y, as hese indi iduals
a e nega i ely a ec ed by he ax.
We examine he di ec e ec s o he ax on he numbe o employees in he ou ism
indus y, he ope a ing ma gins o ho els, he p ice and quan i y o ou ism goods, and he
o e all e enue o he ou ism indus y. To ob ain he esul s, we mul iply
∈π∗
g,τ
wi h he
espec i e elas ici ies de i ed in he ables abo e.
The espec i e elas ici y o he employmen in he ou ism indus y wi h espec o
he ax a e becomes:
∈L∗
T,τ=∈π∗
g,τ∈L∗
T,π∗
g=ηγτ
(η(1−α−β)+α+β)(1−γ)(cw+τ)>0, (47)
Because o he declining incomes o he de s, some he de s will y o ob ain a job in
he ou ism indus y, so ha he wages in he ou ism indus y adjus o he income o
he de s. Hence,
∈Π∗
H,i,τ=∈π∗
g,τ∈Π∗
H,i,π∗
g=−(1−η)(α+β)γτ
(η(1−α−β)+α+β)(1−γ)(cw+τ)(≥0, i η≥1
<0, i η<1, (48)
This mean ha an inc ease in he ax a e leads o an inc ease in he ope a ing p o i s
o ho els, gi en ha he p ice elas ici y o ou ism demand is elas ic. Ho els can o e
hei se ices a a lowe p ice because he wages o hei employees ha e declined, as
no ed below:
∈p∗
T,τ=∈π∗
g,τ∈p∗
T,π∗
g=−γτ(α+β)
(1−γ)(cw+τ)(η(1−α−β)+α+β)<0, (49)
Because o he declined wages, he p ice o he ou ism good dec eases, while he
quan i y supplied inc eases, i.e.,:
∈X∗
T,τ=∈π∗
g,τ∈X∗
T,π∗
g=γτ(α+β)η
(1−γ)(cw+τ)(η(1−α−β)+α+β)>0, (50)
Economies 2025,13, 64 19 o 24
Now we de i e he eac ion o he e enue o he ou ism indus y as ollows:
∈R∗,τ=∈π∗
g,τ∈R∗,π∗
g=γτ(α+β)(1−η)
(1−γ)(cw+τ)(η(1−α−β)+α+β)(≥0, i η≥1
<0, i η<1, (51)
Ob iously, he e ec o he en i onmen al ax is ambiguous, depending on he p ice
elas ici y o demand o ou ism.
P oposi ion 1:The in oduc ion o an en i onmen al ax lowe s he income o he de s and employees
in he ou ism indus y, and bo h lowe s he p ice o he composi e ou ism good and inc eases i s
quan i y. I he p ice elas ici y o ou ism demand is elas ic, he ax causes an inc ease o he p o i o
ho els and he e enue o he ou ism indus y and i s con ibu ion o GDP.
This esul does no imply ha he income educ ion caused by he en i onmen al ax
can be ully compensa ed, bu he exis ence o he ou ism indus y lowe s he bu den o
he de s by o e ing new job oppo uni ies.
4.3. Lump-Sum Financed Ad e ising Expendi u es
In gene al, he e is only one oppo uni y o enhance in e na ional ou ism demand
and ha is o ad e ise Mongolia as a ou ism des ina ion. The simples way o do his is o
equi e om ho els, which bene i s om he lowe wages caused by he en i onmen al ax,
a lump-sum con ibu ion. I is impo an o ensu e ha his con ibu ion does no uin he
ho els, bu i he ad e ising p omo es Mongolia as a ou is des ina ion, his con ibu ion
has he cha ac e is ic o a public good. Using (38), we subs i u e
κ
by
Mϕ
, wi h
ϕ>
0,
whe e
M
a e he o al expendi u es o ad e ising and each ho el mus bea an equal sha e
M
m
. This means ha he p o i s o ho els a e educed by his amoun , bu on he o he hand,
he ho els bene i om he addi ional demand c ea ed by ad e ising. To de i e he e ec s,
we calcula e espec i e elas ici ies, i.e., he elas ici ies o numbe o employees in ou ism
sec o , he ou ism’s good p ice, he ou ism’s good quan i y, and he ou ism’s e enue.
The esul s a e p esen ed in he ollowing able (Table 9).
Table 9. A 1% inc ease o expendi u es o ad e ising Mcauses.
Va iable Name o Elas ici y Change in %
Employmen in ou ism indus y ∈L∗
T,Mϕ
η(1−α−β)+α+β>0
P ice o ou ism good ∈p∗
T,M(1−α−β)ϕ
η(1−α−β)+α+β>0
Quan i y o ou ism good ∈X∗
T,M(α+β)ϕ
η(1−α−β)+α+β>0
Re enue o ou ism indus y ∈R∗,Mϕ
η(1−α−β)+α+β>0
Sou ce: Own calcula ions.
P oposi ion 2:An inc ease o con ibu ion- inanced ad e ising expendi u es leads o an inc ease
o employmen in ou ism indus y, an inc ease o he p ice o he ou ism good, an inc ease o he
quan i y o ou ism good, and an inc ease o he e enue o he ou ism indus y.
As employmen in he ou ism indus y inc eases, he numbe o he de s and goa s
will decline. Consequen ly, he en i onmen al damages caused by ag icul u e will also
dec ease. The e ec i eness o ad e ising e o s will inc ease as he p ice elas ici y o
demand o ou ism goods dec ease.
Economies 2025,13, 64 20 o 24
4.4. A Tax on Ope a i e P o i s and Ad e ising Expendi u es
He e, we conside ano he p oposal, which is o ax he ho els’ p o i s and o use he
ax e enue o inancing ma ke ing and ad e ising Mongolia as a ou ism des ina ion. O
cou se, he ax mus be su icien ly small o ensu e ha ho els do no un losses as a esul .
Using (38), we subs i u e κby Mϕ, whe e Mis de e mined by he implici equa ion:
M=τPm1−β
βm
(1−η)α+1
(η−1)α−(1−β)η−βα
β2(1−η)α+η
(η−1)α−(1−β)η−β
(Pδ)1−η(π∗
g)(η−1)(α+β)
MϕYε
!−1
η(1−α−β)+α+β(52)
Sol ing o Mdeli e s:
M= τp1−β
βη(α+β−1)−α−βα
β2η(1−α)+αPπ∗
gδ(η−1)Y −ε!1
η(α+β−1)−α−β+ϕ
, (53)
We make he echnical assump ion ha
ϕ<η(1−α−β)+α+β
, o he wise he ax
e enue Mdeclines wi h an inc easing ax a e τP.
Inse ing he exp ession o
M
in he ele an a iables like p o i o employmen in
he ou ism indus y, ho el p o i s, p ice o he ou ism good, quan i y o ou ism goods,
and e enue o he ou ism indus y, we calcula e he ollowing elas ici ies:
∈(1−τP)Π∗
H,i,τP=ϕ−τP(η(1−α−β)+α+β)
(1−τP)(η(1−α−β)+α+β−ϕ)>0, (54)
The ne con ibu ion ma gins o ho els inc ease, gi en ha ax a e is no oo high and
he elas ici y o demand o ou ism is no oo inelas ic.
The e ec on employmen is gi en by:
∈L∗
T,τP=ϕ
η(1−α−β)+α+β−ϕ>0 , (55)
I
η(1−α−β)+α+β>ϕ
, he employmen in he ou ism indus y will inc ease and
he numbe o he de s and goa s will decline.
Rega ding he p ice o he ou ism good, we ob ain he ollowing ou come:
∈p∗
T,τP=ϕ(1−α−β)
η(1−α−β)+α+β−ϕ>0, (56)
An inc ease o he ax will cause he p ice o he ou ism o inc ease. The quan i y o
he ou ism good also inc eases because o he inc eased demand o ou ism o e ed in
Mongolia.
∈X∗
T,τP=ϕ(α+β)
η(1−α−β)+α+β−ϕ>0, (57)
To in es iga e he impac on e enue, we analyze he eac ion o he e enue, whe e i
is clea om (54) and (55) ha he e ec is posi i e.
∈R∗,τP=ϕ
η(1−α−β)+α+β+ϕ>0, (58)
Economies 2025,13, 64 21 o 24
P oposi ion 3:The mechanism o inance expendi u es wi h a ax on he ope a i e p o i s o ho els
leads o an inc ease in he p ice o ou ism goods, he quan i y o ou ism goods, he labo o ce in
he ou ism indus y, and he inc ease o e enue.
Howe e , i mus be conside ed ha he emaining ne con ibu ion ma gins need
o co e he capi al cos s o he ho els. Addi ionally, a declining a e o e u n a e axes
educes he p obabili y o a ac ing in es o s in he long un. The inc easing labo o ce
in he ou ism sec o , howe e , implies a declining numbe o he de s and, he e o e, a
declining numbe o goa s. Consequen ly, he en i onmen al damage caused by he ding
will also dec ease.
5. Discussion
In he p e ious sec ion, we ha e shown ha di e en policy measu es may lead o a
s uc u al shi o economic ac i i ies om he ag icul u al o he ou ism sec o . Because
economic ac i i ies in he ag icul u al sec o a e mo e en i onmen ally ha m ul han
economic ac i i ies in he ou ism sec o o equal alue, he o al en i onmen al damages
caused by economic ac i i ies will be educed.
Thus, he de elopmen o ou ism leads o less en i onmen al damage i he economic
ac i i ies eplaced by he ou ism sec o a e mo e en i onmen ally ha m ul han ou ism.
This s a emen holds in gene al, bu i also means ha his esul will be mo e likely o occu
he mo e en i onmen ally iendly he ou ism ac i i ies a e and he be e he ou ism
indus y is se up.
Wi hou any doub , one weakness o his pape is ha ou analysis is es ic ed o
economic consequences, and i igno es he social and cul u al changes and necessa y
adap a ions associa ed wi h changes in he economic s uc u e. These non-economic
changes should no be unde es ima ed by policymake s, and hey mus conside poli ical
opposi ion om he de s and o he pa s o socie y. Howe e , add essing his challenge
and esol ing i mus be le o poli ics.
Ano he ob ious weakness o his pape is ha he da a ega ding Mongolia is o en
ambiguous o missing al oge he . We add essed his p oblem o some ex en by aking
e y conse a i e es ima es. Howe e , we ei e a e he need o ha e eliable da a o
meaning ul poli ical decisions, and hence ecommend ha Mongolian poli icians ec i y
his sho coming immedia ely. Fu he mo e, gi en a be e da abase in he u u e, he
model and i s implica ions can be es ed empi ically in de ail.
Ano he es ic ion is ha we only conside ed wo economic sec o s in ou model,
al hough Mongolia has mo e han wo economic sec o s, and he mos impo an one in
he case o Mongolia is he mining indus y. Howe e , he income o mine s in Mongolia,
like in many pos -So ie coun ies, is disp opo iona ely highe han in all o he sec o s,
and in he emo e a eas whe e ou ism akes place, he only al e na i e economic ac i i y is
ag icul u e and a ming. Because o hese ci cums ances, we a e con inced ha he model
p esen ed is a good app oxima ion o eali y.
6. Conclusions
In his pape , we aim o demons a e wo hings: i s , ha ou ism can help educe
g eenhouse gas emissions, and second, ha Mongolia ul ills he condi ions such ha
he expansion o ou ism can achie e he dual objec i e o educing i s g eenhouse gas
emissions and coun e ac ing he dese i ica ion o i s g asslands. The decisi e ac o in de-
e mining whe he ou ism can suppo en i onmen al p o ec ion is whe he he economic
ac i i ies displaced o eplaced by he g ow h o ou ism ha e a wo se en i onmen al
impac han ou ism. The e o e, he model p o ides a heo e ical ounda ion o why some
Economies 2025,13, 64 22 o 24
empi ical s udies concluded ha inc easing ou ism has educed GHG emissions while
o he s ha e no . Ou model shows ha while ou ism i sel causes en i onmen al impac s,
i de eloped sus ainably, i can help educe en i onmen al damage, p o ided ha ce ain
coun y-speci ic condi ions a e me .
Undoub edly, ou ism ac i i ies a e also associa ed wi h pollu ion and g eenhouse gas
emissions, especially when ou is s a el by ai plane. Despi e limi ed o spa se da a, we
we e able o show ha , o he Mongolian economy, e e y dolla gene a ed in he ou ism
indus y is associa ed wi h only a ac ion o he g eenhouse gas emissions compa ed o
hose gene a ed by Mongolian ag icul u e. This is p ima ily because o e 90% o Mongolian
ag icul u e is based on ex ensi e li es ock a ming. Ano he issue induced by he g ow h
o li es ock a ming is he inc easing dese i ica ion o g asslands, which h ea ens he
exis ence o ag icul u e.
Using a heo e ical economic model ha accoun s o bo h he ou ism economy and
he ag icul u al economy, we show ha a ax on li es ock, ac ing as an en i onmen al ax,
no only educes li es ock numbe s, bu also inc eases he labo supply a ailable o he
ou ism indus y. Consequen ly, he cos s o p o ide s o ou is goods will all, making
Mongolian ou ism mo e a ac i e o in e na ional ou is s. Howe e , a posi i e e ec o
he ou ism indus y only occu s i he p ice elas ici y o ou ism demand is elas ic. I his
is no he case, i is ad isable o p omo e Mongolia mo e igo ously as a ou is des ina ion
o gene a e a posi i e e ec . Speci ically, we show ha ma ke ing expendi u e, inanced
ei he by a ax on ho el p o i s o by a ixed con ibu ion om each ho el, can inc ease ho el
p o i s and, in p inciple, con ibu e o highe alue c ea ion in he ou ism indus y.
Fu u e esea ch should ocus on al e na i e sec o s d i ing he economic g ow h o
Mongolia, including sec o s like educa ion and echnology, because such ac i i ies may
suppo no only he de elopmen o he economy, bu also help o make ou ism mo e
en i onmen ally iendly. Pa icula ly, he model should be ex ended by inco po a ing
human capi al o conside possible ansac ion cos s associa ed wi h he s uc u al change
o he economy.
Au ho Con ibu ions: Concep ualiza ion, L.J. and P.J.S.; me hodology, P.J.S.; o mal analysis, P.J.S.;
in es iga ion, L.J.; w i ing—o iginal d a p epa a ion, L.J.; w i ing— e iew and edi ing, R.R.K. and
P.J.S. All au ho s ha e ead and ag eed o he published e sion o he manusc ip .
Funding: Pe e J. S au e mann acknowledges hank ully he inancial suppo o he Changwon
Na ional Uni e si y in 2024–2025.
In o med Consen S a emen : No applicable.
Da a A ailabili y S a emen : Da ase a ailable on eques om he au ho s.
Acknowledgmen s: The au ho s hank he e iewe s o hei insigh ul commen s and sugges ions.
All emaining e o s a e ou s. Pe e J. S au e mann acknowledges hank ully he inancial suppo o
he Changwon Na ional Uni e si y in 2024–2025.
Con lic s o In e es : The au ho s decla e no con lic o in e es .
No e
1In p inciple, he equa ion should be w i en as ∆S = S min0, 1 −S
Smax −sG .
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Disclaime /Publishe ’s No e: The s a emen s, opinions and da a con ained in all publica ions a e solely hose o he indi idual
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