Importance The global environmental activities develop from the improvement of production processes towards changes in consumption patterns. Many products have the highest impact on environment at the consumption phase. Public authorities are not only one of the largest consumers of goods, works and services, but also have an opportunity, through the public procurement mechanism, to create a sustainable model of consumption and communicate it to the private sector. This is an important incentive mechanism to improve environmental performance under modern conditions. Objectives The aim of the study is to develop proposals for building an incentive mechanism to improve environmental performance on the basis of the contract system in the sphere of State and municipal procurement. Methods Using abstract and logical methods, I defined the most effective mechanisms inherent in the contract system of procurement and proved their expediency. The development of such mechanisms will improve the efficiency of environmental activities. Results I identified the main problems that need to be addressed in the formation of a sustainable model of public procurement. They include: the lack of practical tools and information; overcharge price for more environmentally friendly products and services; underestimated management support. I have developed specific proposals to improve the legal framework in the area of contract system of procurement. Their implementation will ultimately enhance the environmental activities of economic entities on the basis of incentive mechanisms in public procurement. Conclusions The significance of the study is caused by the relevance of the problem relating to formation of sustainable consumption and prevention of environmental degradation. This is especially important in conditions of economic crisis. The incentive mechanism becomes especially important against the background of limited financial resources, which is typical of the present conditions.
Keywords: environmental activities, incentive, contract system, procurement, State needs
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