Development of risk insurance instruments for agricultural land-use management

Abstract

The research paper highlights how the problem of finding instruments of financial and economic support for enterprises in the agricultural sector of economy is addressed and, above all, for business entities in crop production. Given the imperfection of the legal and regulatory framework for agri-environmental safety and economic crisis in Ukraine, there is a need for further instruments, ensuring a balanced development of agricultural land-use management. The most appropriate solution to the above problems is an approach that can provide not only financial support to producers of agricultural products, but also reduce the likelihood of adverse effects or environmental situations with negative economic consequences. The increasing degradation processes in the agricultural sector are the source of environmental threats in the crop production subsector, which require the development of an appropriate strategy for agricultural production based on the needs of all subsystems in the agricultural sector. In order to find solutions to environmental and economic contradictions, it is important to develop a business strategy which includes introducing a set of instruments for enhancing the effective functioning of ecological and economic tools and achieving a balanced level of land-use management. In this regard, risk insurance of agricultural land-use management is an important instrument. Its purpose, along with reducing the economic burden on enterprises, is to reduce the level of threats and mitigate the negative effects of land use.The Directive 2004/35/CE of the European Parliament and of the Council “On environmental liability with regard to the prevention and remedying of environmental damage” serves as an international legal basis for performing the above-mentioned tasks in Ukraine on its way to Europe. Its guiding principle is to take efforts in order to implement measures aimed at preventing negative impact from worsening of environmental safety. However, introducing insurance instrument into practice requires further research of theoretical and methodological aspects of such activities.The key component of such activities is developing a systematic list of risks accompanying economic activities in agricultural land use.