Financing environmental protection in the context of ensuring ecologically balanced development of Ukraine

Purpose. To justify the main directions for the application of institutional instruments to ensure environmentally balanced development and the stable financing of environmental protection activities. Methodology. In the paper, tabular and graphical methods were used to assess the dynamics of the volume and structure of sources of financing for environmental protection measures; regression analysis was applied to determine the correlation between financing environmental protection measures and key environmental indicators; classification, analysis, and synthesis methods were employed to systematize institutional instruments for ensuring environmentally balanced development. Findings. A structural imbalance has been identified in the funding of environmental protection in Ukraine and the regions under review, as environmental protection activities are primarily covered by operating expenses, whilst investment in the modernization of the necessary facilities for environmental protection is significantly lower. An ­inverse relationship has been confirmed between current emissions and the volume of harmful substances released into the atmosphere in Ukraine, the Carpathian region and Lviv oblast. At the same time, it has been established that an increase in emissions into the atmosphere correlates with a rise in capital investments in air protection, which is an example of the so-called “emission intensity paradox” or the “investment in substitution/development phenomenon”. The paper proposes key areas for the application of institutional instruments to reduce emissions of harmful substances into the atmosphere and ensure stable funding for environmental protection activities. Originality. For the first time, for Ukraine and its regions, an econometric diagnosis of the relationship between environmental pollution indicators and both types of financing environmental protection (capital investments and current expenses) was carried out, which made it possible to empirically confirm the asymmetry of the econometric relationships between current and capital expenses and the volume of emissions. Practical value. The proposals developed and the regression models constructed can serve as a practical basis for state and local government authorities in justifying the levels of environmental expenditures.