Economic incentives for environmental investment in modern Russia

Abstract

This paper is relevant due to the critical need for changing the consumption-oriented economic growth model to an investment one for the long-term sustainable development of Russia, considering global environmental challenges. Environmental investments (EIs), responsible and transformative, are positioned as the growth driver. The study aims to assess the mechanism of environmental investment (EI) in modern Russia, determine limitations, and form the resource-saving principles adequate to the latest challenges. The developed regression models of EI resource potential indicate the inability in the current institutional environment to provide the amount of financing required to form a green economy in Russia. This work justifies the need to establish an integrated mechanism for EI economic incentives to increase their amount in the private sector and obtain socio-economic benefits (natural capital maintenance, efficient resource use, and poverty and unemployment reduction). Based on the world’s best practice analysis of state support for EI market instruments, it sets out proposals to establish this mechanism in Russia and confirms the need to create conditions in which it is more profitable for economic agents to invest in reducing their ecological footprint. This paper proves that EIs promotion should combine positive and negative motivation, engagement, and responsibilities.