Economic and mathematical modelling of ecological entrepreneurship as a direction of state agrarian policy

The article considers the approach to environmental entrepreneurship as an enterprise that focuses on compliance with the principles of sustainable development of ecological, economic and social systems in the context of the formation and implementation of state agricultural policy.

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ECONOMIC AND MATHEMATICAL

MODELLING OF ECOLOGICAL ENTREPRENEURSHIP AS A DIRECTION OF

STATE AGRARIAN POLICY

Antonina Bobkova

Department of Commercial Law, Vasyl' Stus Donetsk National University, Vinnitsya, Ukraine

Yaroslav Sydorov

Department of Administrative and Economic Law, Zaporizhzhia National University, Zaporizhzhya, Ukraine

Anatolii Karpuk

Department of Forest Taxation and Forest Management, Principal, Separate Division of

National University of Life and Environmental Sciences of Ukraine

"Boyarka Forest Research Station", Kyiv, Ukraine

Yaroslav Oliinyk

Department of Economic and Social Geography, Taras Shevchenko National University of Kyiv, Ukraine

Viktoriia Samofatova

Department of Industrial Economics, Odessa National Academy of Food Technologies, Odessa, Ukraine

ABSTRACT

The article considers the approach to environmental entrepreneurship as an enterprise that focuses on compliance with the principles of sustainable development

of ecological, economic and social systems in the context of the formation and implementation of state agricultural policy

A methodology for modelling the fund of environmental entrepreneurship as a tool for implementing agricultural policy is proposed This technique can be used to select the most appropriate option from both an ecological and an economic point of view The possibilities provided by this approach and the nuances of this technique are considered The examples show the options of modelling various industrial complexes for processing agricultural waste

Keywords: Agrarian Policy, Agricultural Waste Processing, Environmental Business Fund, Environmental Entrepreneurship

Cite this Article: Antonina Bobkova, Yaroslav Sydorov, Anatolii Karpuk, Yaroslav

Oliinyk, Viktoriia Samofatova, Economic and Mathematical Modelling of Ecological

Entrepreneurship as a Direction of State Agrarian Policy, International Journal of

Management (IJM), 11 (2), 2020, pp 85–94

http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=2

1 INTRODUCTION

The state of the environment is increasingly affecting economic development, health and life expectancy A further uncontrolled increase in the anthropogenic load on natural resources can lead to a global violation of the natural balance, which will entail the destruction of the natural balance of human life A growing population and increasing consumption, reduction and depletion of suitable agricultural land, set the government of the countries of the world the task of a thorough approach to the formation of agricultural policy [1-4]

Rational use and protection of natural resources is a necessary condition for overcoming the environmental and economic crisis One of the main new opportunities is the formation and development of ecological entrepreneurship and the transition to the production of environmentally friendly products Over the past decade, the global market for eco-products has grown three times [5-6]

An expert assessment of the global market for environmental products allows us to talk about an estimated capacity of $ 500 billion) Moreover, this market is also one of the fastest growing, its annual growth is more than 5%, and in some countries, the growth rate is projected even higher

Environmental entrepreneurship, in its essence, is an initiative economic activity carried out taking into account ecological requirements and restrictions, aimed at avoiding and reducing negative environmental impacts, as well as improving ecological indicators to maximize profits

According to the value approach, the difference between ecological entrepreneurship and more conventional is, in addition to a combination of ecological and economic goals, that is, production, work and services that ensure compliance with environmental requirements established by applicable law The usefulness of ecological and traditional enterprise products can be represented using Fig.1

Figure 1 The ratio of traditional and environmental components of a product utility

Traditional utility

Environmental utility

Traditional Enterprise Product

Product in the field

of environmentally oriented entrepreneurship

Product environmental entrepreneurship

As an ecological utility, we will consider service generated as a result of meeting ecological and economic needs that increase the sustainability of an environmental system or are neutral concerning its sustainability [7-10]

It can be concluded that the criterion for classifying business as one of the forms (traditional entrepreneurship, environmentally oriented entrepreneurship, environmental entrepreneurship) is the share of ecological utility in the total usefulness of the product At the same time, the attributive properties of environmental entrepreneurship are defined by these four features:

 the determining share of environmental utility in the total efficiency of the product;

 the satisfaction of environmental needs (from the position of consumers);

 income from the "sale" of environmental utility (from the position of entrepreneurs);

 the resources of the ecological system are considered as priority factors affecting the needs of individuals

2 METHODOLOGY

The process of forming an environmental entrepreneurship market as part of the state agrarian policy involves stabilizing the ecological situation and improving ecological measures with economic benefits for the enterprises involved

2.1 Recycling of Agricultural Waste as a Basis for Eco-Friendly

Entrepreneurship

World experience indicates that the development of production leads to an increase in the anthropogenic load on the environment, while agricultural activity is typical is no exception

In the field of agricultural waste management, a situation may arise that could lead to an environmental disaster in the territories of their direct formation, as well as in adjacent storage areas

The experience of the agro-industrial complex shows that the most significant number of problems is associated with one of the types of agricultural waste, namely, biological This type of waste, if mishandled, can provoke various epidemics, improper storage of organic waste causes not only environmental but also significant economic damage to agricultural producers and the social consequences are not always measurable

Territories where biological waste is stored lead to the degradation of large areas of agricultural land, and also significantly reduce the investment attractiveness of the regions Correct waste recycling should provide for the full use (if possible) of by-products, waste from processing agricultural raw materials, animal and poultry cases, proper handling of land (to prevent humus in the soil, deposits, salinization, acidification of soils, exposure to wind and water erosion), the use in accordance with the approved standards of mineral fertilizers, protective equipment, the collection and disposal of waste oils, containers

It should be borne in mind that so far a significant part of the agricultural waste is not used, despite the fact that only a small percentage of this waste needs to be disposed of, this is clearly seen from the diagram in Fig 2

Figure 2 Agro-industrial waste structure

It is the provision of services for the processing (recycling) of biological wastes of the agricultural complex that can be taken as an example of environmental entrepreneurship, which will take into account only the economic component, but also the environmental consequences of this type of activity

With this approach, the relationship structure and the position of environmental entrepreneurship in the system of public policy and the global economy can be represented as

a diagram in Fig 3

Figure 3 The system of relationships and the position of environmental entrepreneurship in state

agricultural policy

Economic system of the country

World economic system

Agricultural sector

Agricultural enterprise of regional level

State agricultural enterprise

Local agricultural enterprise

Agricultural enterprise with foreign capital

Environmental entrepreneurship

Services and Products

2%

40%

33%

25%

Non-recyclable biohazardous waste Unused waste

Recycled waste used as fertilizer Waste used to generate electricity

All of the above factors show that environmental entrepreneurship has great potential when used properly in the field of state agrarian policy

2.2 Economic and Mathematical Modelling of the Ecological Enterprise

The possibility of using this or that waste as a raw material for the production of products demanded by the market is determined by some factors: the amount of waste generated, the availability of innovative and environmentally friendly technologies for waste processing, the demand for products made from recycled materials All these factors will determine the economic, environmental and social efficiency of waste management

Since the activities associated with the processing of waste are aimed at both obtaining an economic and an environmental result, there is a need to evaluate the indicators of economic profitability (R economy) and environmental profitability (R ecology) of this production The value of the economic profitability of R economy can be defined as the ratio of the size of the profit of the enterprise engaged in waste processing to its revenue:

where I is the size of the benefit of the enterprise whose activity is associated with waste processing;

G - the revenue of the enterprise whose activities are associated with waste processing

The value of will depend on factors: V, E, C, T and can be represented as a functional dependence:

where V is the volume (availability) of secondary raw materials (waste);

E - waste processing costs;

C - cost of recycled materials;

T - development costs or technology acquisition costs

The value of environmental profitability R ecology is defined as the ratio of the amount of prevented damage to the environment to the size of the revenue of the enterprise whose activity is associated with waste processing:

where P is the size of the prevented damage to the environment;

G - the revenue of the enterprise whose activities are associated with waste processing

This indicator can be represented as a functional dependence, where the variables are T and P:

where T is the development costs or technology acquisition cost;

P - the size of the prevented damage to the environment

Such differentiation will allow us to form a positioning matrix according to a criterion that takes into account both economic and environmental feasibility and simulates the process of a profitable enterprise for processing agricultural waste, presented in Fig 4

100%

Hj - Si Hj - Mi Hj - Hi

60%

Mj - Si Mj - Mi Mj - Hi

30%

Sj - Si Sj - Mi Sj - Hi

Environmental profitability

Figure 4 Profitability Positioning Matrix

Using the criterion of environmental and economic profitability, we distinguish three groups of industrial complexes:

profitable - {Hj - Mi}; {Hj - Hi}; {Mj - Hi};

mid-income - {Hj - Si}; {Mj - Mi}; {Sj - Hi};

low-yield - {Mj - Si}; {Sj - Si}; {Sj - Mi}

Each of the identified groups is characterized by a specific set of parameters that make it possible to make informed decisions regarding the possibility and environmental and economic feasibility of investing in the production process of an ecological enterprise for processing agricultural waste

The constructed economic and mathematical model will be able to serve as the basis for policy formation and determining the possibility of conducting activities in the agricultural sector, taking into account the capabilities of the environmental enterprise

2.3 Mechanism for the Creation of Public Policy in the Field of Stimulating

Environmental Entrepreneurship

The mechanism for the development of entrepreneurship is a set of tools, methods and forms

of implementing system goals through the organization and management of the reproduction process The organizational and economic mechanism of environmental entrepreneurship is defined as a combination of organizational, socio-social and financial-economic instruments The state as a critical player in the market of environmental goods and services has its own regulatory and incentive mechanisms, as part of the country's overall agricultural policy Among them, the following financial and economic instruments can be distinguished: preferential taxation, environmental pricing, subsidies, guarantee funds, subsidies, microcredit, etc

The purpose of these tools is not to directly set goals that are significant for individual enterprises or society as a whole and to strictly enforce them, but to use incentives related to the functioning of markets to influence the economic interests and economic behaviour of business entities in an environmentally relevant direction

To determine a specific set of tools, apply the following essential criteria:

 efficiency (the ability to achieve economic and environmental goals, realize the mission and switch to sustainable development in the most rational way minimizing costs);

 justice (concerning the distribution of the consequences of the introduction of tools between various social groups and business entities);

 feasibility (organizational and informational, resource, staffing measures);

 flexibility (adaptability and adaptation to changes in the market environment, orientation towards the progressive improvement of the environmental situation);

 time factor (use of long-term incentives, motivation for innovations in the best technologies, taking into account the long-term consequences of greening);

 socio-political acceptability (determination of socially acceptable limits of negative impact on the environment, social harmony and tolerance, voluntary decision of environmental obligations and responsibilities of producers)

 determination of environmental commitments and liabilities of producers)

3 EXPERIMENT AND ANALYSIS OF THE RESULTS

As a basis for the experiment, an option will be chosen to create an environmental entrepreneurship fund, with subsequent modelling of its activities, in the field of financing ecological entrepreneurship in the processing of agricultural waste

Fig 5 shows the origins of formation and the direction of spending the funds of the environmental entrepreneurship fund

Figure 5 Sources of funds and directions of fund financing

An essential feature of the environmental entrepreneurship fund will be to maintain this type of activity in the field of interests of the state agrarian policy, that is, in this situation, its work will be carried out in financing projects in the environmental sphere Accordingly, there

is a need to decide on determining the size of the lending rate for investment projects in the field of processing waste of different profitability The interest rate as the price of a credit resource is a complex characteristic since it is formed under the influence of a complex system of factors, especially in the environmental sphere The most important factors affecting the interest rate include inflation since it affects the level of depreciation of money Internal factors that do not depend on the state of the country's economy include loan term, loan size, demand for credit resources, borrower category and its economic situation

In our study, the output rate Y was selected as the interest rate for lending to plants for the processing of wastes from the FEP in% Under the conditions of the available information,

Environmental Entrepreneurship Fund

State subsidies

Payments for negative environmental impact

Profit from the activities of the fund Sources of financing

Waste processing Environmental science New technical developments

Direction of spending

five variables were included in the model: X1 - loan size; X2 - loan term (year); X3 - inflation rate (%); X4 - the possible profit of the borrower (rubles); X5 - level of risk (%)

The popular program Statistica was chosen as the statistical data processing software product, and in particular, the Multiply Regression module was used

The final form of the equation is obtained:

The testing of modelling tools for environmental entrepreneurship in the provision of agricultural waste processing services is presented in three options, in Table 1:

 production complex for anaerobic digestion of agricultural waste;

 production complex for the generation of energy from agricultural waste;

 production complex for the production of animal feed and fertilizer from agricultural waste

Table 1 Resulting indicators of agricultural waste processing plants

Options

Complex for anaerobic digestion of rural waste farms

Complex for the generation of energy from rural waste farms

Complex for the production of feed for animal and fertilizer from agricultural waste

The volume of processing waste production, t/year

(capacity) 2000 2000 1200

Productivity of the installation for finished products,

t/year 3000 3850 1800

Capital expenditures for the creation of production,

million USD 25,5 27 49,5

Price with VAT per unit of output, USD/T 9000 5000 26000

Prevented environmental damage, million USD year 9,5 11,4 5,7

Economic profitability 0,8 0,68 0,89

Environmental profitability 0,44 0,87 0,14

Next, a matrix is constructed for positioning the complexes according to the criteria of environmental and economic profitability (Fig 6), to choose a technology that provides the necessary level of profitability of the use of waste for the production of marketable products

Figure 6 Production option positioning matrix in terms of economic and environmental profitability

As can be seen from the matrix, depending on the option, agricultural waste can be processed into various possibilities for useful raw materials, and according to the degree of profitability, it can be either a profitable or an average lucrative option

Next, we consider the options for instruments that the state can use in the framework of agricultural policy, to ensure financing of the most effective business projects of environmental entrepreneurship (Fig 7)

Figure 7 The scheme of choice of instruments of state regulation

If FEP is chosen as the source of financing, then an option is proposed for calculating the interest rate (under the following conditions: loan term - 10 years, inflation - 6%, risk level - 9%, since this production is classified as profitable, based on risk allocation schemes):

Y = 5.218 + 0.098 * 10 + 0.273 * 6 + 1.533 * 9 = 21.63%

4 CONCLUSION

Activities in the field of environmental entrepreneurship already in the first stages of its development (prevention of environmental impact) can lead to significant economic and environmental effects

The state, as a participant in economic relations, may be the catalyst that stimulates the development of environmental entrepreneurship in the right direction from agricultural policy Economic and mathematical modelling of environmental entrepreneurship is a powerful tool that allows you to make informed decisions and analyze using relevant and verified data The effect of the positive impact on both the environmental and economic components of this type of activity is difficult to overestimate In modern conditions, it is the managerial will

of the state apparatus that is able to make this mechanism work for the good of society

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Economic profitability 0,68

Environmental profitability

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