Ijm 11 02 009

International Journal of Management (IJM)
Volume 11, Issue 2, February 2020, pp. 85–94, Article ID: IJM_11_02_009
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=2
Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication Scopus Indexed
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.
http://www.iaeme.com/IJM/index.asp 85 editor@iaeme.com
Economic and Mathematical Modelling of Ecological Entrepreneurship as a Direction of State
Agrarian Policy
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.
Traditional
Traditional Enterprise
utility Product
Product in the field

of environmentally
oriented
entrepreneurship
Environmental Product
utility environmental
entrepreneurship
Figure 1 The ratio of traditional and environmental components of a product utility
Antonina Bobkova, Yaroslav Sydorov, Anatolii Karpuk, Yaroslav Oliinyk, Viktoriia Samofatova
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.
Agrarian Policy
2%
25%
40%
33%
Non-recyclable biohazardous waste

Unused waste
Recycled waste used as fertilizer
Waste used to generate electricity
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.
Economic system of World economic

the country system
Agricultural sector
Innovation, Technology, Investment
Legal Regulation and Economic Policy
Agricultural State agricultural

enterprise of enterprise
regional level
Agricultural
Local agricultural
enterprise with
enterprise
foreign capital
Services and
Products
Environmental entrepreneurship
Figure 3 The system of relationships and the position of environmental entrepreneurship in state
agricultural policy
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
Agrarian Policy
100%
Economic profitability
Hj - Si Hj - Mi Hj - Hi
60%
Mj - Si Mj - Mi Mj - Hi
30%
Sj - Si Sj - Mi Sj - Hi
30% 60% 100%

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.
Sources of financing
Payments for
negative Profit from the
State subsidies environmental activities of the
fund
impact
Environmental
Entrepreneurship Fund
New technical
Waste processing Environmental science developments
Direction of spending
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,
Agrarian Policy
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

Complex for Complex for the Complex for the
anaerobic generation of production of feed
Options digestion of energy from for animal and
rural waste rural waste fertilizer from
farms farms agricultural waste
The volume of processing waste production, t/year
(capacity)
2000 2000 1200
Productivity of the installation for finished products,
3000 3850 1800
t/year
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).
Complex for anaerobic Complex for the generation Production of feed for
Performance
indicators
digestion of energy animal and fertilizer
Economic profitability 0,8 Economic profitability 0,68 Economic profitability 0,89
Environmental profitability Environmental profitability Environmental profitability

0,87 0,14
Rate of return
0,44
Highly profitable Highly profitable Medium profitable
Investment tax credit Preferential taxation Preferential taxation

Government Policy
Soft loan Soft loan Pricing

Tools
Microcredit State guarantees State guarantees
Environmental Enterprise Environmental Enterprise Environmental Enterprise

Fund Fund Fund
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.
REFERENCES
[1] Antoshin K.A., Development of the system of agribusiness information and consultation
as direction of state agrarian policy, August 2015, DOI: 10.18551/rjoas.2015-08.04
[2] Michael J. Lenox, Jeffrey G. York, Environmental Entrepreneurship, January 2012, DOI:
10.1093/oxfordhb/9780199584451.003.0004
Agrarian Policy
[3] Bautin V.M., Lipchenko E.A., State Agrarian Policy: Structuring of Investments in the
Economy of the Agrarian Region, April 2019, DOI: 10.31442/0235-2494-2019-0-4-2-5
[4] Bashynska I.O., Using SMM by industrial enterprises, Actual Problems of Economics, 12
(186), pp. 360-369. 2018
[5] Natalia Pavlovna Voronina N.P., Normative and legal support for the development of
agricultural cooperation in the constituent entities of the Russian federation as a direction
of state agrarian policy, January 2018, DOI: 10.17803/1994-1471.2018.91.6.199-207
[6] Gideon Markman et al., Impact, Sustainable, Social and Environmental Entrepreneurship,
Academy of Management Annual Meeting Proceedings, (1), pp. 11242, 2019, DOI:
10.5465/AMBPP.2019.11242symposium
[7] Mikhail Nikolaevich Dudin, Natalia Pavlovna Ivashchenko, Alexander Georgievich
Gurinovich, Lidiya Sonina, Environmental entrepreneurship: characteristics of
organization and development, June 2019, DOI: 10.9770/jesi.2019.6.4(22)
[8] Stuart Parris, Smart cities: locations for environmental entrepreneurship, In book: Energy
and Mobility in Smart Cities, January 2019, DOI: 10.1680/emsc.64256.031
[9] Aleksandr A. Mokhov, The Special Legal Regime of Environmental Entrepreneurship,
Jurist (Washington, D.C.), 12, 2018, pp. 32-38 DOI: 10.18572/1812-3929-2018-12-32-38
[10] Lassi Linnanen, An Insider's Experiences with Environmental Entrepreneurship, Greener
Management International, 38(38), 2002, DOI: 10.9774/GLEAF.3062.2002.su.00008
[11] Dr. Ranjana Gujrati, Dr. Varuna Tyagi and Lawan A. Lawan, Family Financial Status and
Students „Entrepreneurial Intention: The Mediatory Role of Entrepreneurship Education.
Journal of Management, 6(3), pp. 21–28, 2019
[12] M. Malarkodi and Dr. Saifil Ali, Women Social Entrepreneurship and its Impact on
Entrepreneurial Performance. International Journal of Management, 9 (1), pp. 10–15.
2018
[13] Dr. Mohammad Tahir Khan, “Multimedia OSS and Entrepreneurship: opportunities”.
Journal of Management, 5(3), pp. 32–35, 2018

Ijm 11 02 009

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ijm 11 02 009

Uploaded by

Copyright:

Available Formats

International Journal of Management (IJM)

© IAEME Publication Scopus Indexed

ECONOMIC AND MATHEMATICAL

Keywords: Agrarian Policy, Agricultural Waste Processing, Environmental Business

Product in the field

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

As an ecological utility, we will consider service generated as a result of meeting

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

Non-recyclable biohazardous waste

Figure 2 Agro-industrial waste structure

Economic system of World economic

Agricultural State agricultural

2.2. Economic and Mathematical Modelling of the Ecological Enterprise

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

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

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

where T is the development costs or technology acquisition cost;

30% 60% 100%

Figure 4 Profitability Positioning Matrix

 justice (concerning the distribution of the consequences of the introduction of tools

3. EXPERIMENT AND ANALYSIS OF THE RESULTS

Figure 5 Sources of funds and directions of fund financing

The testing of modelling tools for environmental entrepreneurship in the provision of

Table 1 Resulting indicators of agricultural waste processing plants

digestion of energy animal and fertilizer

Economic profitability 0,8 Economic profitability 0,68 Economic profitability 0,89

Environmental profitability Environmental profitability Environmental profitability

Highly profitable Highly profitable Medium profitable

Investment tax credit Preferential taxation Preferential taxation

Soft loan Soft loan Pricing

Microcredit State guarantees State guarantees

Environmental Enterprise Environmental Enterprise Environmental Enterprise

Figure 7 The scheme of choice of instruments of state regulation

You might also like