Financial Measures to Reduce Carbon Emissions in Britain, Japan and the United States: A SWOT Analysis

To mitigate global warming, China, the world’s largest greenhouse gas emitter, has set the goals of achieving carbon peak by 2030 and carbon neutrality by 2060, and financial measures could play an important role. To avoid unnecessary costs, China could learn from the experience of other countries to better understand the potential role of financial measures in achieving carbon emission reduction goals. Hence, this article adopts a SWOT analysis to compare the financial measures taken by Britain, Japan and the United States in the process of carbon emission reduction in the last twenty years. This article finds that government funds and financial innovation have contributed markedly to carbon emission reduction in those three countries. With the help of the SWOT analysis, we recommend that China take financial measures to help achieve carbon peaking and carbon neutrality goals from four aspects: formulating proper policy, regulating carbon trading market, strengthening international cooperation, and promoting innovation.

Introduction
The environmental deterioration caused by global warming has had serious impacts on economic activities and society in recent years [1,2]. As greenhouse gas emissions are the main driver of the global warming, increasing numbers of countries have promised to reduce carbon dioxide emissions [3]. For this purpose, as the world's largest greenhouse gas emitter, China has announced the goal of achieving peak carbon emissions by 2030 and carbon neutrality by 2060 (the "Dual Carbon Goals") [4]. Financial measures can play an important role in achieving both goals. It has been suggested that China learn from international experience in industrial upgrading, energy adjustment, the development of low-carbon economies [5], and adopting foreign energy and low-carbon technologies to reduce carbon emissions [6]. Few studies have focused on how financial measures could facilitate reducing carbon emissions. Hence, this study will analyze the experience of financial measures adopted in three leading countries, Britain, Japan and the United States, to provide insightful suggestions on low-carbon financial measures for China.
In recent years, China has actively promoted financial participation in carbon emission reduction, developed green finance, and strengthened international financial cooperation to facilitate the realization of the dual carbon goals [7][8][9]. Hence, China's green finance measures to reduce carbon emissions have developed rapidly, although considerable improvement is necessary compared with the financial measures adopted in certain developed countries such as Britain, Japan and the United States. This motivates us to conduct an overall analysis of the strengths (S), weaknesses (W), opportunities (O) and threats (T) associated with the implementation of financial measures to reduce emissions in the three countries. The SWOT analysis helps us concentrate on the most important factors that are essential for our purpose, although the analysis suffers certain limitations such as ambiguity and lack of mechanism to rank the significance of involved factors.
The analysis is useful for China to improve its existing financial measures to reduce emissions since similar financial measures are probably affected by the same external and internal influencing factors, although certain differences exist between the policy contexts in China and other countries. The novelty of this article is an overall SWOT analysis of the financial measures in Britain, Japan and the United States and what this implies for China to improve its financial measures.
The remainder of the paper is organized as follows. Section 2 briefly reviews related literature. Section 3 presents the materials and the method used in this study. Section 4 briefly introduces the financial measures in the three countries. Section 5 provides an overall SWOT analysis. Section 6 discusses issues related to the analysis including policy implications for China. The last section concludes the paper.

Literature Review
The common practice of financial measures for carbon emission reduction is to combine low-carbon funds with low-carbon industries, such as increasing financial support for low-carbon technologies and energy [10]. The effectiveness of such measures has been verified in Korea, Russia and other countries [11][12][13][14]. The financial measures are generally promoted by two key partners: governments and financial institutions [15][16][17]. For example, a government can set budget benchmarks and provide financial assistance for carbon-intensive industries (e.g., energy and transportation) to achieve low-carbon development [18][19][20]. Financial institutions can provide low-carbon funds to high-carbon industries through financial innovation, inducing carbon-intensive enterprises to actively participate in emission reduction activities by efficiently using the low-carbon funds [21,22]. While these existing studies have analyzed certain financial measures to reduce emissions taken by both governments and financial institutions, few studies have provided a comparative analysis of the advantages and disadvantages of the financial measures already taken by developed countries, where carbon peak has been achieved and carbon neutrality is targeted for around 2050.
In China, scholars mainly focus on green finance itself from the perspective of financial institutions, rather than financial support for carbon emission reduction [23]. Currently, promoting green transformation has become a development direction pursued by financial institutions in China [24,25], mainly by developing green financial products [26], which are dominated by green funds and green bonds [27][28][29]. Considering the key role of China as the largest global emitter and the potential role of financial measures to reduce emissions, the government and financial institutions in China could adopt more innovative financial measures to reduce emissions by learning from the experiences of other countries, as will be explored by this study.
Green financial instruments can face certain risks, such as the risk of violent fluctuations in financial markets [30]. To effectively prevent these risks, financial institutions themselves can set up risk plans and voluntarily disclose potential risks while government supervision has to be strengthened [31,32]. The government supervision is particularly important for preventing green financial risks since certain risks can be identified earlier and resolved timely [33]. In Japan, the government has established supervision standards through legislation, demanding that financial institutions conducting risk assessment and risk disclosure to strengthen public awareness of the potential risks related to environmental protection [34]. Another risk is related to economic globalization if a domestic green financial market opens to the external market [35] to strengthen international cooperation and promote the globalization of green finance [36]. Hence, a general assessment of risks related to financial measures to reduce emissions would be useful for a country like China.
To sum up, given the existing literature on financial measures to reduce emissions, it is necessary to comparatively analyze the financial measures already adopted by certain developed countries achieving carbon peak. Particularly, an in-depth analysis of the roles of governments and financial institutions would be very useful. The comparative analysis is expected to present the advantages, disadvantages, opportunities and risks related to the financial measures. In doing so, other countries like China could learn from the experience of these pilot countries to achieve carbon peak and, ambitiously, carbon neutrality. Hence, such a comparative analysis will be provided by this study to extend the literature line.

Materials
As indicated by the Organization for Economic Cooperation and Development (OECD) statistics [37], Britain is the first country to achieve carbon peak, Japan is the first country to implement energy conservation and environmental protection policies and the United States is the first country to establish a carbon trading platform. In the process of carbon emission reduction, the financial support of these three countries has played a considerable role as described in Section 4. Therefore, Britain, Japan and the United States are selected as research cases, and data and materials are obtained from recent relevant government websites, database and related literature [38][39][40]. Britain's data are derived from Britain's government website and related literature [41][42][43][44]; Japan's data come from the Japanese Ministry of the Environment, the Ministry of Finance and related company announcements [45,46]; and the data for the United States are public data on the carbon market, government documents and related literature [47,48]. For China, data and materials come from the website of the National Bureau of Statistics and related literature [49][50][51]. In addition, carbon emissions data are taken from the OECD website [37].

Analytical Method
This article adopts the SWOT analysis method that permeates the academic peerreviewed literature for strategic positioning [52]. The method originated in the 1980s and is based on internal and external competitive environments and situational analysis under competitive conditions [53]. Following the method, the factors closely related to the research object, strengths (S), weaknesses (W), opportunities (O) and threats (T), are arranged in a matrix [54,55]. These internal and external factors are systematically and comprehensively analyzed [56,57] to draw clear and concise conclusions. When comparing multiple things, it is easy to show the essential characteristics of different things through a SWOT matrix [58], which can be used for reference by other things through the integration conclusion.
In this study, the practice of financial support for carbon emission reduction in the three countries is presented in the form of a matrix following a SWOT analysis with clear reference to other countries. As far as the method is concerned, SWOT analysis has certain limitations, such as the difficulty determining boundaries between elements and the fact that the analysis can be rigid [59,60]. Therefore, only financial measures are discussed to avoid the problem of dividing the boundaries of elements in this study. Moreover, the different measures of the three countries are dynamically compared in the analysis to avoid the rigidity problem.
In recent years, the SWOT analysis method has been widely used in the financial field to analyze carbon finance [61], green finance [62] and public finance [63]. In this study, data and materials related to carbon emissions and financial measures to reduce carbon emissions of the three chosen countries are collected, analyzed and classified to identify the relationships between financial measures and carbon emission reduction. Then, SWOT analysis is used to analyze and compare the four dimensions (S, W, O and T) of the financial measures for carbon emission reduction in the three countries.

Britain
Britain achieved carbon peak in 1991 according to the statistics of OECD [37]. Since then, the British government has been committed to reducing carbon emissions. In June 2019, the newly revised Climate Change Act formally confirmed that Britain will achieve carbon neutrality and net zero greenhouse gas emissions by 2050 [64]. The financial measures taken by Britain to reduce carbon emissions can be classified into one of three types: providing governmental funding; establishing carbon funds; and constructing green banks.

Providing Government Funding
The British government and central bank have provided significant funding to reduce carbon emissions. In 2003, the white paper Our Energy Future: Creating a Low-carbon Economy announced that carbon emissions by 2050 should be reduced by 60% compared with 2003 through financial investment and other supportive measures [41]. With the support of government finance, Britain has achieved remarkable results in carbon emission reduction [65]. The British government has issued laws to ensure the efficient use of the government funding. In 2008, the British government promulgated the Climate Change Act and set up the "carbon budget" decree of the five-year emission plans [42]. Carbon emissions were set 3018 Mt for the period from 2008 to 2012 and 2782 Mt for the period from 2013 to 2017. The carbon budget goals set for both five-year plans have been realized with the support of the government funding, among other measures [66]. The British government specified in the Clean Growth Strategy to increase financial support for CCUS (carbon capture, utilization and storage) technology, and 6 CCUS clusters have been formed [67]. In 2020, the British government also announced a £12 billion investment in the Green Industrial Revolution [68], which is currently underway.

Establishing Carbon Funds
Since 2001, the Britain government has invested in setting up a carbon fund to support private low-carbon efforts. So far, the fund has played an important role in helping enterprises to innovate low-carbon technologies, improve resource efficiency and promote the marketization of low-carbon technologies [69]. In June 2011, the British government invested £560 million to establish a sustainable transport fund to support low-carbon transportation choices, such as public transportation, walking and bicycle sharing [70]. In 2012, local governments provided an additional £40 million to the sustainable transport fund. From 2011 to 2015, the sustainable transport fund provided financial assistance to 96 sustainable transportation projects, which greatly reduced carbon emissions in the field of transportation [71]. In March 2020, Britain announced the CCS Infrastructure Fund (CIF) in the budget for the first time and indicated that the government would invest £1 billion to build CCUS clusters to ensure the goal of zero net emission by 2050 [72].

Constructing Green Banks
The establishment of the Green Investment Bank (GIB) in 2010 is an important measure to provide the necessary funds to achieve the governmental goals of reducing carbon emissions [73]. The GIB has provided increasing green capital investments as follows: GBP 635 million, GBP 668 million, GBP 723 million and GBP 770 million in 2012-2013, 2013-2014, 2014-2015 and 2015-2016, respectively [74]. About 80% of the total funds are used to support five activities: offshore wind power, garbage and recycling, energy efficiency of non-domestic energy, waste to energy and "Green Deal" [75].

Japan
Japan achieved peak carbon emissions in 2013 [37]. Japan has the goal of achieving net zero emission of greenhouse gases by 2050 to fully achieve carbon neutrality [76]. The financial measures taken by Japan to reduce carbon emissions are mainly three types: inducing more green investment by government funding, providing financial benefits to induce social capital into low-carbon projects, and promoting innovation of green finance.

Inducing Green Investment by Government Funding
The Japanese government has invested huge government funding to support lowcarbon technology innovation, promote the development of low-carbon industries and to induce more green investment. In 1999, the Ministry of the Environment of Japan set a budget of JPY 86 billion to support sustainable development, including activities to reduce carbon emissions [77]. In 2004, the Development Bank of Japan (DBJ) introduced "promoting environment-friendly operating financing business" to inject money into the field of environmental protection and promote sustainable development [78]. The government has provided financial support for developing new energy-saving, low-carbon and environmentally friendly materials and technologies; promoting the commercialization of low-carbon technologies; and developing green transportation and green energy [76]. An evaluation of Japan's financial support for environmental projects shows that the emissions in the transportation sector have significantly reduced, and the phenomenon of traffic congestion has been alleviated [79]. It is estimated that the strategy will boost Japan's economic growth by JPY 90 trillion by 2030 and JPY 190 trillion by 2050 [80].

Providing Financial Benefits to Induce Social Capital into Low-Carbon Projects
The Japanese government encourages social capital to actively participate in carbon emission reduction activities. In the bidding process of the Guangzhisen Solar Power Generation Project in Osaka, Japan [81], the municipal government provided the construction land free of charge, publicly solicited the scheme and invited bids from enterprises for construction. The social responsibility of enterprises was one of the key factors considered in determining the successful bidder. Enterprises in Japan can obtain a tax deduction if they produce energy-saving products or absorb carbon dioxide by other means so that carbon emissions in the production are reduced [46]. Enterprises in low-carbon industries can also receive low-carbon subsidies. In 2020, the Ministry of Economy, Trade and Industry of Japan decided to implement fiscal and taxation benefits and other incentives to mobilize a large amount of private investment into green industries [77].

Promoting Innovation of Green Finance
Japan's green finance started early and enjoyed rapid innovation. In 2004, the Japanese Ministry of the Environment established the Global Environmental Research Fund to provide financial support for reducing carbon emissions [82]. Thanks to the green fund, Japan achieved carbon peak in 2013 [83]. The New Energy and Industrial Technology Development Organization (NEDO) set up a fund of JPY 2 trillion to support enterprises to implement the latest green and low-carbon technologies for 10 consecutive years [84]. In addition, the Development Bank of Japan issued sustainable development bonds for two consecutive years (2015 and 2016) to promote green development. Many companies have also issued green bonds many times [85]. Japanese banks are the main green financial institutions that promote the low-carbon development of enterprises through preferential interest rates, graded loans and private debt issuance [86]. The extensive use of green financial products has greatly improved the efficiency of Japan's financial support for carbon emission reduction and accelerated the zero carbon plan process [87].

The United States
In 2007, carbon emissions in the United States achieved the peak [37]. After Biden became President of the United States, he announced the goal of achieving carbon-free power generation by 2035 and striving to achieve carbon neutrality by 2050 [88]. The financial measures taken by the United States to reduce carbon emissions include: providing financial support from the federal and state governments; promoting innovation of financial institutions; and constructing carbon trading market [89].

Providing Financial Support from the Governments
In 1992, the United States promulgated the Energy Policy Act, which allowed enterprises and individuals to receive subsidies if they reduced the use of fossil fuel, actively used low-carbon renewable energy and improve energy efficiency [90]. In 2002, the United States promulgated The Small Business Liability Relief and Brownfield Site Revitalization Act to reduce the liability of small businesses and set up environmental insurance [91]. These two bills not only reduced carbon emissions but also promoted the development of new energy sources such as wind energy [92].
The federal government has injected significant amounts of money into carbon emission reduction efforts including directly providing financial assistance to related enterprises to reduce carbon emissions. In 2009, the Obama Administration invested $2.4 billion in the automobile industry to actively promote the growth of the electric vehicle industry and reduce the exhaust emissions of traditional fuel vehicles; in 2014, the New York government established the New York Green Bank Project to provide financing for renewable energy projects that are temporarily unable to obtain private investment and to promote green development; From 2016 to 2018, investment in sustainable projects increased from $8.7 trillion to $12 trillion, which resulted in a massive reduction in domestic carbon emission [93]. In 2020, during the United States Presidential election, Biden proposed a plan worth $2 trillion. After being inaugurated as the United States President, he actively promoted this plan. On 19 November 2021, the plan worth $2 trillion was officially passed: The United States government would invest $495 billion to cope with climate change and slow down the rate of climate warming; in addition, the United States has integrated the carbon emission reduction plan with people's lives. As early as 1936, after the promulgation of the earliest environmental finance bill in the United States, Act on Bus Exhaust Control, public transportation was cleaner, and carbon emissions from public transportation were reduced [94].

Promoting Innovation of Financial Institutions
The American capital market is well known for its vastly developed capital market all over the world, which provides strong support for its financial innovation [95]. First, related green bond products have been developed to fill the funding gap of climate change mitigation [96]. Second, financial products such as green insurance and green guarantees have been developed. Green insurance and green guarantees belong to credit transactions; that is, the issuer bears the liability of pollution compensation for enterprises and individual consumers who buy the product. The United States also issued the Green Century Equity Fund and the Pax World Global Green Fund Individual Investor fund to encourage the investment in carbon emission reduction, gas emission, clean energy and other related fields [95]. Third, the banking industry, including state-owned banks and private banks, actively participates in the field of green emission reduction. In 2013, Bank of America proposed to invest $125 billion to support environmental protection business activities by 2025; in 2017, JP Morgan Chase announced that it would invest $200 billion to support green sustainable development before 2025. At present, these two plans are in progress and have achieved good results [97].

Constructing Carbon Trading Market
The United States was the first country to establish a carbon trading platform, with regional trading markets as the main types (i.e., trading markets established within or between states), and the overall scale is limited. In 2003, the Chicago Climate Exchange (CCX), the world's first standardized climate trading platform and the first institution to implement voluntary participation and legally effective cap and trade, was formally established and put into operation [98]. The main services provided by the CCX are to trade greenhouse gas emission rights and implement membership trading. In addition to emission right trading, the United States carbon trading market also implements a series of incentive measures such as free allocation of carbon allowance and providing certain subsidies for carbon emissions trading projects [99]. The establishment of this trading market provides a reference for other states, and a number of carbon emission reduction projects such as the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI) in the United States have been designed and implemented. Different from CCX, RGGI is a mandatory emissions reduction system based on a market model that limits emissions in the power industry and adjusts the plan in time according to historical emissions and operation conditions [100]. WCI is a multinational carbon trading platform that aims to reduce greenhouse gas emission in the involved region. It was jointly established by California in the United States and four Canadian states [101]. The carbon trading market increases the proportion of cleaner production in GDP [102].

SWOT Analysis of Financial Measures in Britain, Japan and the United States
The above section summarizes the financial measures Britain, Japan and the United States took to reduce carbon emissions. In this section, a SWOT analysis is carried out to analyze the similarities and differences of the financial measures in the three countries. For each country, a SWOT matrix is made to classify the internal and external factors of the financial measures related to strengths, weaknesses, opportunities and threats. Based on the three SWOT matrices, further comparison and analysis are conducted to identify the potential measures to improve for each country. Finally, the similarities and differences of these factors across countries are identified and analyzed.

Internal Factors
The fact that Britain achieved carbon peak earlier in 1991 [37], meaning much less pressure to cut emissions. Even though, the British government has implemented various financial measures to reduce emissions as introduced above, which are advantages. In terms of disadvantages, the efficiency of the use of government funds is not measured since it is difficult to effectively regulate [103]. In addition, excessive intervention in the financial markets deenergizes the markets and weakens the regulatory functions of the market for carbon reduction. Financial institutions themselves do not participate enough in carbon reduction, lack innovation in their financial products and lack contact with foreign financial markets [71].

External Factors
In terms of opportunities, because of the early carbon peak in the country, the British experience and practice was studied and learned by certain countries to reduce their emissions [64]. Since 1991, the increasing global economic development has facilitated the global flow of finance, which makes it easier to attract foreign funds to invest in carbon reduction. Since Britain's formal Brexit in 2020, the government autonomy has been greatly improved [104], which may imply more flexible financial measures to reduce carbon emissions.
In terms of threats, British carbon fund-based financial products are mostly used in their own countries amid a lack of international competitiveness [69]. In addition, economic globalization also accelerated the transmission of financial risks, affecting the stability of international financial markets [105]. For security reasons, some transnational financial institutions reduce the flow of funds, making it more difficult to attract foreign investment to reduce carbon emissions [106].

SWOT Matrix and Implications for Improvement
By considering these internal and external factors, we make a SWOT analysis matrix for Britain (Table 1). The matrix highlights certain aspects to be improved for Britain. For example, Combine S and O, Britain is suggested to further develop financial measure to support the realization of clear carbon reduction plans, and introduce foreign funds to support carbon reduction; combining W and O, Britain could improve the efficiency of government funding measures and strengthen low carbon financial innovation; combining S and T, Britain may attract social subjects to participate in carbon emission reduction and prevent financial risks; combining W and T, Britain could actively attract the participation of domestic and foreign financial institutions while maintaining financial market stability. The government has formulated many incentive policies and invested at a considerable scale every year to reduce carbon emissions 3.
Carry out industry-wide carbon reduction activities 4.
Green banks play a key role and carbon fund products are fully utilized 1.
No effective supervision of government funds, and the efficiency of fund utilization is not clear 2.
Green financial products are mainly carbon funds, and the innovation of low-carbon financial products is slow 3.
The government intervenes more in the financial market, and the market lacks vitality 4.
Mainly domestic, less contact with foreign financial institutions Opportunities (O) SO strategies WO strategies 1.
The first country to put forward the concept of low-carbon development, and the low-carbon theory has spread abroad.
Economic independence after leaving the EU has increased 1.
Increase government support and formulate clear carbon emission reduction plans 2.
Introduce foreign capital to invest in low-carbon projects 3.
Increase financial support for the entire industry and build a low-carbon society 4.
Promote the transformation of theoretical achievements and strengthen the innovation of low-carbon financial products 1. Improve the utilization efficiency of low-carbon funds supported by the government 2.
Strengthen links with foreign financial institutions and promote product innovation 3.
Reduce direct government intervention in financial markets and increase market vitality 4.
Conform to the global economic development trend and develop a low-carbon economy Threats (T) ST strategies WT strategies 1.
Since 1990s, the international society was turbulent and the international financial market was unstable.

2.
The ability to innovate financial products is insufficient, and it is difficult to carry out large-scale commercial applications in the international market 3.
Less foreign capital enters the country, which has greater financial pressure 1.
Invest capital to innovate low-carbon financial products and put them into the market 2.
Guide social capital to join and reduce government financial pressure 3.
Reduce external shocks and prevent financial risks 1. Improve the utilization efficiency of government funds and reduce financial pressure 2.
Improve the enthusiasm of financial institutions and design new low-carbon financial products 3.
Set the threshold for foreign investment to improve the security of the domestic financial system

Internal Factors
In terms of strengths, Similar to Britain, the Japanese government has implemented considerable financial measures to reduce carbon emissions. Another strength of Japan is the development of green finance, which provides more financial funds for carbon reduction [82,84]. Moreover, Japan's social participation enthusiasm is high as indicated by the high proportion of social capital for carbon reduction [81].
In terms of weaknesses, Japan's green finance gives priority to traditional green financial products and pays less attention to new low carbon financial products [107]. Moreover, the efficiency of the use of carbon reduction capital is difficult to measure, which may affect the efficient use of the financial funds from government and social participants [79].

External Factors
In terms of opportunities, thanks to the strong connections between domestic financial institutions and international financial markets, Japan can strengthen financial cooperation and attract foreign funds to support carbon reduction [34]. The strengthening of economic globalization also provides opportunities for Japan to use foreign funds to support carbon reduction. Currently, the continuous expansion of the international green finance market share also helps Japan to strengthen international green finance cooperation [38].
In terms of threats, the existence of Japan's bilateral credit system makes it face a high exchange rate risk when introducing foreign capital [85]. The influx of a large amount of foreign funds will also have an impact on domestic economic stability. Japan's domestic financial institutions face different trading rules when they participate in foreign financial markets, which makes the transactions inefficient [81]. When domestic firms are not competitive enough, the lack of attraction to international financial institutions leads to reduced financial support.

SWOT Matrix and Implications for Improvement
A SWOT analysis matrix is made for Japan ( Table 2) that shows some improvements in Japan. Combining S and O, Japan could strengthen cooperation with international financial institutions, develop green finance and develop new green financial products; combining W and O, Japan could strengthen financial supervision and improve the efficiency of carbon emission reduction funds; combining S with T, Japan could regulate the participation of social subjects, strengthen the supervision of foreign investment, and maintain economic stability; combining W and T, Japan could develop new financial products, develop energy finance and increase financial support for low-carbon enterprises. Green finance is developing rapidly at a large scale 3.
Social subjects are highly motivated to participate in carbon emission reduction, and a large amount of social capital is invested in low-carbon projects 1.
The government does not supervise the investment funds, and the efficiency of low-carbon funds is difficult to measure 2.
Financial institutions mainly focus on traditional green financial products, with fewer new low-carbon financial products 3.
There is no evaluation of the participation of social subjects in green projects Opportunities (O) SO strategies WO strategies 1. Economic globalization has strenthened and international financial market connections are more convenient 2.
The concept of low carbon environmental protection is accepted by most countries 3.
Domestic financial institutions are closely linked with international financial institutions 4.
The proportion of green finance business of international financial institutions has increased 1.
Conform to the trend of economic globalization and develop green finance 2.
Practice the concept of low-carbon environmental protection and invest funds to support low-carbon enterprises 3.
Strengthen cooperation with international financial institutions and develop international green finance business 4.
Innovate low-carbon financial products and guide social capital investment 1.
Strengthen fund supervision and improve funds use efficiency 2.
Guide financial institutions to upgrade their business and develop new green financial services 3.
Strengthen international financial cooperation and build international green projects Threats (T) ST strategies WT strategies 1. The bilateral credit system is greatly affected by exchange rate fluctuations 2.
A large number of foreign investments will have an impact on the domestic economy 3.
Green financial products have different rules and low transaction efficiency in the global green financial market 4.
Insufficient competitiveness will weaken the attractiveness of domestic low-carbon enterprises to international capital 1. Increase financial support for low-carbon enterprises to improve competitiveness 2.
Formulate relevant laws and regulations to regulate the participation of social capital 3.
Strengthen capital supervision and prevent financial risks 4.
Improve the efficiency of foreign capital utilization and maintain domestic economic stability 1. Improve the utilization efficiency of domestic and foreign capital and maintain domestic economic stability 2.
Design new green financial products to improve the participation efficiency of social subjects 3.
Strengthen capital supervision and maintain financial market stability 4.
Develop energy finance to help companies make energy transitions

Internal Factors
One strength of the United States is that the federal and local governments have taken considerable financial measures to reduce carbon emissions. As the global financial center, the United States has developed financial markets, strong financial innovation capability and a variety of low-carbon financial products [95].
In terms of weaknesses, total carbon emissions and per capita emissions in the United States are large [37], which increases the difficulty of financial support for carbon emission reduction. The use efficiency of carbon emission reduction funds is difficult to measure, and the decentralized carbon emission trading market has a negative impact on the United States financial support for carbon emission reduction [102]. In addition, the financial institutions in the country have insufficient awareness of risk prevention, and the financial market is prone to periodic financial crises, which affects the continuity of financial support for carbon emission reduction [108].

External Factors
In terms of opportunities, the United States has more opportunities than Britain and Japan. The position of the global financial center facilitates its enhanced cooperation with international financial markets and facilitates the global issuance of green financial products by the United States, which are purchased by many investors [95]. Every year, many carbon finance professionals in the United States help the United States develop more low-carbon financial products and improve international competitiveness [108].
In terms of threats, the United States has a well-developed financial system but has provided limited low-carbon financial assistance to developing countries [88]. The cyclical financial crisis in the capital market has a great impact on the United States, and the large fluctuations in its currency also increase the risk of low-carbon financial products and reduce their attractiveness to investors [105]. In addition, the different rules of international financial products also increase the issuance cost and transaction cost of green financial products.

SWOT Matrix and Implications for Improvement
Similarly, a SWOT analysis matrix is made for the United States (Table 3) to indicate certain improvement measures for the country. Combining S and O, the United States could strengthen cooperation between government and financial institutions, improve financial innovation and issue more low-carbon financial products for global investment; combining W with O, the country can strengthen the supervision of carbon reduction funds, establish a national carbon trading market, and work with international financial institutions to cultivate carbon finance talents; combining S with T, the United States could increase financial assistance for carbon emission reduction in developing countries, comply with international financial market rules and issue low-carbon financial products, and prevent financial risks; combining W and T, the United States may strengthen capital supervision, improve the efficiency of financial support for carbon emission reduction, and develop more new green financial products to promote carbon emission reduction. Have a high level of financial innovation and advanced low-carbon financial products 3.
The federal and local governments jointly invest funds to support carbon emission reduction 1.
The total amount of carbon emissions is relatively large, and the per capita carbon emissions are relatively high 2.
The government does not supervise the investment funds, and the efficiency of the use of funds is difficult to measure 3.
The carbon trading market is dominated by regional markets, and there is no unified national market 4.
Financial institutions have weak awareness of risk prevention, and cyclical economic crises often occur The scale of the global green finance market continues to expand 2.
A large number of carbon finance talents from abroad enter the United States every year 3.
It is located in the world financial center and has close ties with the world economy 4.
A large number of foreign investors purchase low-carbon financial products in the United States

1.
Increase capital investment and cultivate carbon finance talent 2.
Improve the level of innovation and develop more low-carbon financial products 3.
Follow the development trend of the global green financial market and issue low-carbon financial products to global investors 4.
Strengthen the cooperation between the government and financial institutions to improve the efficiency of capital utilization 1.
Develop more green financial products suitable for carbon emission reduction 2.
Strengthen fund supervision and improve fund use efficiency 3.
Strengthen cooperation among international financial institutions and cultivate carbon finance talents 4.
Establish a national carbon trading market and prevent financial risks Threats (T) ST strategies WT strategies

1.
Provide less low-carbon aid money to other countries, face a crisis of mistrust 2.
The cyclical economic crisis has a greater impact on the capital market 3.
Dollar fluctuations affect the international competitiveness of domestic low-carbon financial products 4.
There are differences in the trading rules of international financial products, increasing transaction costs 1.
Increase low-carbon financial assistance to other countries and enhance the international image 2.
Prevent financial risks and maintain the stability of the capital market 3.
Strengthen the innovation of low-carbon financial products and improve product competitiveness 4.
Comply with international financial product trading rules and reduce transaction costs 1.
Increase government low-carbon funding and provide low-carbon assistance to other countries 2.
Strengthen capital supervision and maintain capital market stability 3.
Develop new green financial products and improve international competitiveness 4.
Build a national carbon trading market and conduct carbon trading with international markets

Similarities and Differences Analysis
In this subsection, we compare and analyze the similarities and differences of the three countries' financial measures for carbon emission reduction. First, regarding the government's financial support. In all three countries, the government departments have played a leading role in the process of financial support for carbon emission reduction, such as low-carbon technology, low-carbon energy and other products, and announcing policies and regulations regarding the use of the funds to support carbon emission reduction. However, the efficiency of the use of the support funds has not been properly measured. In addition, there are differences between the practices of the three governments. The British government controls more from a macro point of view, pointing out the direction of financial support for carbon reduction. The Japanese government is more cautious about the use of the government budget. The central and local governments of the United States jointly play a role, and local governments have greater autonomy in the use of funds.
Second, regarding the participation of financial institutions, all three countries have developed certain green finance mechanisms (Table 4). Unlike government financial support, financial institutions are more involved in carbon reduction through the provision of green financial products, operating in a cooperative mode between the government and financial institutions. The high degree of financial market liberalization in the three countries makes it convenient for domestic institutions to connect with foreign green financial markets. Domestic financial institutions face many risks in participating in international green financial markets, most notably exchange rate risk [40]. In addition, there are differences in the use of financial products among the three countries. Britain supports carbon reduction by developing carbon funds and establishing green banks. Japan supports carbon reduction mainly through green bonds and green credit. The United States strengthens financial product innovation, constantly updates financial products such as green insurance and green stocks and uses capital advantages to issue green financial products globally.
Third, regarding the participation of social subjects, carbon reduction needs considerable financial support that governments cannot provide alone. Therefore, Britain, Japan, and the United States actively guide social subjects to participate in the construction of lowcarbon society. The governments provide financial subsidies and tax reliefs to encourage enterprises to carry out low-carbon transformation and reduce carbon dioxide emissions.
The participation of social subjects in the three countries in carbon emission reduction is also different. The British social subjects have a strong sense of participation in carbon emission reduction. After the government establishes the carbon fund product, the social main body manages and the green bank finally becomes the folk organization. Japanese social subjects mainly participate in the construction of green projects and promote lowcarbon innovation. The social subjects of the United States mainly reduce carbon emissions by using low-carbon energy.

Discussion on Analysis Results
As shown in the above SWOT analysis of financial measures for carbon emission reduction, internal and external factors have different impacts. For individual countries, the internal circumstances of each country differ, but the external environment is similar. Therefore, when using financial measures to support carbon reduction, the general conclusion is to give full play to the domestic advantages (S), change the weak conditions (W), seize the opportunity (O) and overcome the threat (T).
In terms of the internal environment, the government and financial institutions play a key role by providing financial funding and actively guiding private participation in carbon reduction financing. The results of the implementation of the measures in the three countries show that direct government financial support has a better and long-term effect on carbon reduction. In contrast, if the government funds are insufficient, support from financial institutions should be given priority. Since most financial institutions pursue profitable businesses, government support in policy, tax relief and other ways is required to encourage financial institutions to support carbon reduction. For any funds to reduce emissions, it is necessary to measure its utilization efficiency indicated by, for example, the project return rate and capital turnover rate. The risks in the process of capital utilization can largely be solved through supervision and the conclusion of default contracts.
In terms of the external environment, countries around the world face similar external factors. Compared with internal factors, external factors tend to have little effect on a country's domestic financial support for carbon reduction. As shown in the SWOT analysis above, external factors are mainly related to opportunities and threats. Economic globalization and the expansion of global green financial markets have brought opportunities for countries' financial support for carbon reduction, mainly in the sense of facilitating the free flow of financial capital. More international inflow of funds may reduce the demand for domestic financial support. The international inflow of funds can potentially promote carbon emission reduction activities in countries that have not achieved carbon peak, especially most developing countries. However, note that opportunities and risks coexist. Unrest in international situations can affect the free flow of funds, making it more difficult for countries with less support for carbon reduction to obtain international capital. The existence of international financial risks will also make it prudent to deal with financial capital to reduce carbon emissions. Therefore, it is necessary to strengthen international financial cooperation, improve international financial markets and strengthen financial supervision.

Policy Implications for China
First, the government of China is suggested to make policies and implement financial measures to support carbon emissions reduction. Based on the measures taken by the three countries, the financial support of the government has a significant impact on carbon emission reduction. To reduce carbon emissions, the government can formulate relevant budgets, increase the scale of green investment, and support the development and utilization of CCUS technology [109]. Other measures may include formulating clear and effective plans, setting up relevant policy banks, and guiding the use of funds by the public finance sector. In addition, tax relief and financial subsidies should be provided for carbon emission reduction related industries. Key industries and enterprises that are capable could be supported to take the lead in reaching the carbon peak at a local level.
Second, it will be important to regulate the carbon trading market and improve trading efficiency. It is crucial to improve trading efficiency by promoting the construction of carbon trading market and clarifying the obligations of each trading entity [110]. Compared with Britain, Japan and the United States, China's carbon trading market is relatively late in construction, although has developed rapidly. Recently a national market has been established in China. To avoid potential cost risks related to the carbon trading market, China can study and learn from the experience of Britain and the United States. Ideally, China could strengthen cooperation with developed countries by jointly formulating the rules of the carbon trading market, promoting the construction of the international market and improving the efficiency of carbon trading.
Third, strengthening international financial cooperation will be significant. In 2008, Industrial Bank Co., Ltd. officially adopted the Equator Guidelines and became the first bank in China to carry out green finance business. Since then, increasing numbers of Chinese banks have launched green finance services, providing large amounts of capital to low-carbon companies and actively participating in international cooperation [111]. Among the Global Certified Climate Bond Issuers in 2021, China Development Bank ranks top one in terms of issuance scale [49]. Even though, the development of financial institutions in China is not perfect in the sense that China can learn the advanced green finance development methods from Britain and Japan to guide financial institutions and other partners to actively participate in carbon reduction.
Fourth, improving financial innovation capabilities and strengthening financial supervision are also critical. Compared with Britain, Japan and the United States, China's financial innovation capacity is insufficient [112]. China needs to develop green and low-carbon financial products and promote the transformation of green finance. The effectiveness of the financial market transition to a low-carbon economy depends on attracting investors and removing financial market barriers [113]. To attract enterprises to actively reduce carbon emissions, China could innovate more financial products suitable for carbon emission reduction and reduce the financing cost of enterprises. China could also pro-mote its financial innovation by strengthening cooperation with the United States financial institutions and learning advanced technologies.

Limitations
This study has certain limitations. In the analysis method, the analysis accuracy of the SWOT analysis method needs to be improved since the method cannot be used to accurately analyze an issue in complex environments. For this study, the analysis results only apply when the internal and external environments do not change dramatically. Otherwise, it is necessary to adjust the analytical framework and reconsider relevant internal and external factors.
This study selects Britain, Japan and the United States as research cases without taking into account the practices in other countries. This study relies mainly on the data and materials of the past twenty years. However, as many countries have announced carbon neutrality goals, various new financial measures could appear accordingly. Further study may be needed to consider whether there are significant differences between existing and new financial measures to reduce carbon emissions.

Conclusions
In this study, motivated by what China can learn from other countries, we have analyzed the strengths, weaknesses, opportunities and threats related to financial measures to reduce emissions in Britain, Japan and the United States. The similarities and differences between the three countries are analyzed from three aspects: government's financial support, participation of financial institutions and participation of social subjects. Policy implications for China are presented from four aspects: proper government policy and financial measures, regulating the carbon trading market, strengthening international financial cooperation and improving financial innovation capabilities.
Further research can be improved from three aspects. First, the SWOT model can be adjusted to consider the changes in the internal and external environments in the future. Second, this study only analyzes general practices in financial support for carbon emission reduction, and thus a comparison between specific practices of financial measures can be conducted to obtain better results. Third, more effective financial measures to reduce emissions might be identified if we compare the past financial measures to reduce emissions with the latest measures that this study has not covered.

Data Availability Statement:
The data used to support the findings of this study are available from the corresponding author upon request.


The relationship between income and assets in farms and context of sustainable development

The objective of this paper is to identify the relationship between farm income and assets within the European Union (EU) in the context of economic and environmental sustainable development. The scientific context is connected to economic theory (the recognition of the nature of such a relationship, as well as the determination of whether sustainable development acts as a stimulant or destimulant under these conditions). The Farm Accounting Data Network system was employed in the article. The econometric models were estimated by panel data based on the reported results of the farms operations in EU member states for the period of 2004–2018. Accordingly, the relationship between income and assets is positive and statistically significant, but not very clear in the group of surveyed farms. Moreover, economic sustainability was found to positively influences the relationship between income and assets. In contrast, the relationship between incomes and assets was weakened. The situation is brought about by the intrinsic growth in the value of the land, as well as by the growing importance of non-productive assets. Thus, farmers in EU countries are becoming wealthier in terms of the value of their assets but, this is not reflected directly in their income. The reason is the growing importance of environmental and social functions in the agriculture the European Union. Greater skills in asset management at farm level are, therefore, required to mitigate the situation.

Introduction
The accumulation of assets is one of the determinants of agricultural development processes. This mainly refers to the process of depositing the income generated in agriculture through investments to maintain the continuity of farm operations. Additionally, increasing the value of assets at the farm level determines economic viability. The relationship between income and assets develops through a sequence of actions: income-savings-propensity to invest-investment-productive and non-productive assets (accumulation). In the article, this approach has been extended via a focus on sustainable development: sustainability (economic and environmental)-income-savings-propensity to invest-investment-productive and non-productive assets (accumulation). The analysed problems also correspond to the broader concept of a circular economy, which emphasises the optimisation of resource management [1], and thus involves the economics of sustainable development [2][3][4].
In the present situation, possibility exists of increasing the value of farm assets due to the intrinsic growth in the price of agricultural land. However, according to research [5], farmers' investment behaviour, and thus the relevant asset-income relationship, escapes classical economic theories. If we take into account issues of sustainable development, a question then arises: Is there a conflict between the economic (high income, larger assets) and environmental objectives in agricultural holdings [6]?
The objective of the paper is to identify the relationship between farm assets and income in EU21 countries by considering the context of economic and environmental sustainable development. Currently, the issue of the paradigm of sustainable development in agriculture is becoming increasingly important, both in scientific and practical terms. Contrary to appearances, the relationship is not entirely obvious due to, for example, the possibility of an intrinsic growth in agricultural land prices (not resulting from an increase in the productivity of land). The capitalisation of subsidies [7], and the relatively constant demand for land in a situation of fixed supply are important here.
The research hypotheses were formulated as follows:

H3: Environmental sustainability has a negative impact on the relationship between farm income and assets (capital).
In the case of H1, the term 'clear'means that variable 'income'is statistically significant in the analysed econometric panel models. Simultaneously the relative impact of income on assets (capital), by the prism of the coefficient of regression after standardisation is the highest, as compared to the value of such coefficient for other variables.
The motivation for the study is the existence of a research gap in the relationship between agricultural income and assets that takes the context of economic and environmental sustainability into account. A second motivation is to generate better understanding of current farm development mechanisms. As Hill [8] pointed out, changes in the value of farm assets are often left out while the analyses focus on income issues.
There are also trends in agriculture in the EU relating to increase in agricultural land prices and capitalisation of support in agricultural land prices [9], and the increasing emphasis on the environmental context [10,11]. The importance of non-productive assets in farms in EU countries is growing as well [12]. So farmers in the EU are becoming wealthier in terms of the value of assets. However, this is not reflected in their income. In sum, references to the discussed problems can be also found in Piketty's [13] book in terms of links between wealth and profits.
There are both scientific and practical dimensions to the regarded issue. The first refers to the recognition of the nature of such a relationship, as well as to the determination of whether sustainable development is a stimulant or a destimulant in these cases. In contrast, the practical dimension refers to the recommendations for the functioning of farms and the direction of changes due to the EU's Common Agricultural Policy (CAP) concerning sustaining the economic vitality of farms. The context of the on-going discussion on further changes in the EU's CAP also cannot be ignored, as well as the structure of the EU's budget expenditure.
The article consists of five parts. In the Introduction, the motivation to conduct the research, and its hypotheses are presented; in the Literature review, the current state-of-the-art on the raised issues is included; the applied methodology is then explained. Afterwards, the obtained research results are analysed, and the end of the article, conclusions, reflections and the implications for policy adjustments are presented.

Theoretical background
The accumulation of assets in the classical approach is based on the production function: The transformation of savings that arise from agricultural income into investments undertaken by the agricultural producer refers to Eq 1. In the traditional approach, analogies can be found in the Solow model [14], whereby the greater the amount of capital, the greater the investment (Fig 1). A shortcoming of Solow's theory is the assumption that other inputs are not relatively important. Consequently, environmental issues are omitted, which are increasingly important at the level of shaping development conditions for farms within the EU (the CAP instruments). There are examples in the literature of the application of Solow's theory in agriculture [15].
As evidence in Fig 1 the slope of production function is positive but increasingly flattened, this results from the decreasing productivity of capital. Hence, the existence of marginal effects in the context of the relation between profit and capital is relatively universal in economic processes influencing farm operation. However, the uniqueness of the decreasing productivity of capital for farms comes down to the fact that agriculture has a weak market position due to, for example, its distance from the final consumer, as well as generally unfavourable price relationships between the products sold and purchased by farmers [16]. Moreover, there is an increase in the importance of non-productive assets, for example, larger building areas for livestock stands. The increasing role of non-productive assets is a consequence of the need for agricultural producers to meet the requirements for receiving subsidies. As a result, the decreasing productivity of capital acts more restrictively, weakening the relationship between income and assets. In Fig 1, this is reflected by the sf agr (k) curve. Its position, above a certain scale of production, is higher than average in the economy due to the intrinsic growth in land prices that increases the value of the assets specially when farmers own their land.
The curve for agriculture (Fig 1) can be considered to be more flattened due to the increased importance of non-productive assets (the need to meet environmental standards), as well as the aforementioned generally unfavourable price relations stated in [16]. In turn, for agriculture, the initial course of the curve results from the fact that for low-scale agricultural outputs, meeting the consumption needs of the farming family takes precedence. Subsequently, regarding investment outlays, the scope of institutionalization of market relations is small and fixed costs are relatively high. Consequently, production effects grow slowly, and the course of the function will change only when a certain threshold of production is exceeded.
In the case of agriculture, we often have to deal with a situation whereby agricultural income alone is sufficient solely to satisfy (not always fully) the consumption needs of the farmer and his family due to the small scale of activity minimal farm income and the domination of non-agricultural sources of income. Thus, there are limited possibilities for financing investments and growth in asset value in agricultural holdings. In consequence, we have the decapitalisation of farm assets, which is additionally aggravated by low creditworthiness or a lack of successors. Analysed issues have been studied in the literature in the context of the so-called 'wealth of farm households' [8,17]. So agricultural activity alone, despite the considerable accumulation of farm assets, is not able to generate income parity. Therefore, the importance of off-farm sources of income increases. Indeed, according to data derived from the Farm Accounting Data Network (FADN) system (EU21), in 2004, the share of non-farm income from farms (agritourism, income from rent, forest, rent of equipment) as agricultural income was 17.1%, while in 2018 it was 24.5%.
Larger farms, which are strongly linked to the market, function on a kind of treadmill. The increase in the value of depreciable assets derived from the desire to improve their competitive position generates ever-greater costs due to the necessity of renewing the assets-higher depreciation costs. In this way the increase in the value of depreciable assets creates pressure for further investments. Part of this type of investment is non-productive or is related to the obligatory fulfilment of requirements under the EU's CAP, such as the cross-compliance rules in terms of animal welfare. The cross-compliance rules refer i.a. to stock density, For example, [18], based on studies of EU agriculture in the period 1995-2015, found the occurrence of a growth-rate i.e. an increase in real productivity caused a decrease in the growth rate of agricultural income. Hence, while the processes of increase in real productivity stimulate investments, and enhance the value of assets, t they only to a small extent, contribute to the growth of income.
Interesting considerations concerning capital accumulation were presented in [19], where it was pointed out that capital accumulation in agriculture was a function of the past (primary accumulation). Consequently, it is very difficult for smaller farms with a lower level of assets to 'catch up'with economically stronger units.
Swinnen and Gow [20] exposed the importance of external sources of financing in capital creation. Thus the value of assets is shaped not only by income, but also by liabilities. In turn, [21] showed that, in the case of farms in the USA, the value of assets in the farm sector between 2009 and 2016 increased by about 34%, while agricultural income only enlarged by about 11%. Similar trends were also reported in earlier studies [22]. In contrast, for farms covered by the FADN system, the median of average annual growth in agricultural income in the EU23 countries was 1.42% over the period 2004-2018, while total assets were 2.49%. Higher growth in the value of assets than in income indicates the functioning of agriculture under conditions of decreasing marginal effects, but also the loosening of the links between assets and income.

Sustainable development
There are very many proposals for quantification of sustainable development at farm level [23][24][25], and in the literature we can find theoretical and empirical studies that suggest the existence of synergies between different dimensions of sustainability. For instance, Martínez-Sastrea et al. [26] mention the simultaneous positive effects of animal diversity on pest-control and pollination in apple orchards in Spain.
At present, the operation of agricultural holdings in EU countries is being implemented in conditions that increasingly take into account the context of sustainable development. Therefore, the analysed issues correspond in practical terms currently with a set of initiatives of European Commission to achieve climate neutrality in Europe, the so-called European Green Deal [27]. From the perspective of the relationship, the approach to resource management can be discerned [28,29]. Among other issues, the idea is to reduce the pressure from farms on the environment while not worsening the productivity of the used resources [30]. At the farm level, not worsening the productivity of resources while reducing the pressure on environment, means that the relationship between income and assets should not be weakened, while environmental sustainability is simultaneously maintained. In practice, however, the objectives of farmers that are linked to economic and environmental dimensions can be contradictory. This can lead to situations in which growing farm income and assets are accompanied by greater pressure on the environment or increasing stratification of incomes and assets among farmers. For example, [31], on investigating sheep farms (in different farming systems) in north-eastern Spain, a clear trade-off between the economic and environmental goals was evident, whereby the higher the economic sustainability, the lower the environmental sustainability. Moreover, [32] underlined how the risk of the negative impact of farms on the environment increased with the growing accumulation and intensification of production. The authors of [33,34] also affirmed the interchangeability between environmental and economic dimensions in the functioning of farms. In turn [35][36][37] indicate that a balance between these dimensions is possible and the relationship between economic and environmental objectives is positive.
Different studies stress that larger units, and therefore those with more assets and income, have a better chance of having a positive relationship between the economic and environmental spheres [38]. Moreover, Špička et al. [39], based on the experience of farms in the Czech Republic, underline, that a trade-off between environmental sustainability and economic performance occurs primarily among farming specialisation categories.

Capitalisation of subsidies
The process of asset accumulation mainly occurs, as mentioned earlier, through income. However, there is another channel through which accumulation occurs -subsidy capitalisation [7,40]. Direct payments are captured in lease rates and in land. Consequently, the links between income and assets are weaker. The CAP reinforces the pressure on land prices due to decoupled payments. As a result, the rapid growth in land prices has become a significant barrier for farmers who want to increase the scale of their farming activities [41]. For example, as reported by Ciaian et al. [7], in new EU member countries, the capitalisation rate was 79% after the budgetary reform period in 2013. In the old member countries, the capitalisation rate was 43%. The biggest beneficiaries of subsidy capitalisation are landowners, as they have gained from increase value of agricultural land, whereas the actual users i.e. farmers have obstacles because of the increase in lease and land prices.
The importance of the subsidy capitalisation process can be proven by the fact that, after integration with the EU, agricultural land prices in the new member states (e.g. in Poland rose significantly. The data about agricultural land prices published by EUROSTAT indicate that between 2011 and 2019, only in Greece, Lithuania, Slovakia and Italy did average land prices decrease. In contrast, in the remaining countries, there was an increase, and this was significant (more than 1.5-fold) in the Czech Republic, Estonia, Latvia, Luxemburg, Hungary, Poland and Sweden. The additional amenities of land are important here. Moreover, the capitalization of subsidies can create a wealth effect. Farmers may be willing to expand production through activities that they would consider risky in the absence of guaranteed income from direct payments [42]. On the macroeconomic level, therefore, this may stimulate investment in agriculture

Research methodology
The research methodology used in the article is complex. Therefore it is introduced in Table 1.

Data
In the study, FADN data were employed. The origin of the sources is a website https:// agridata.ec.europa.eu/extensions/FarmEconomyFocus/FADNDatabase.html. The mentioned website contains economic and production information about farms covered by the FADN system in the EU Member States. The term 'assets'refers, especially in the empirical part, to the value of assets of the economic units (farms) for both current and fixed components. Such definition of 'total assets'is in line with the FADN system (fixed assets + current assets) [43]. Only assets in ownership are taken into account, based on the value at closing valuation for the year. As a result, we have the same counting of assets across EU countries, which makes it possible to compare them.
Data of the FADN system are publicly available because of the assured confidentiality of the participating farms and the data are published in the different cross-sections only if there are at least 15 agricultural holdings in the group. Such data are microeconomic and refer to the arithmetic mean of the average farm for a given group of farms (by type of production, economic size, region, country). Thus, the data illustrate the situation of the representative farm  for a given country, which is the result of the behaviour of many agricultural producers. The time scope of analysis refers to the period 2004-2018, which was dictated by the availability of data for the studied countries at the time of writing of the article. The value of total assets was used as a dependent variable (SE436). Total assets, both fixed and current, create and determine the level of income, regardless of whether they are owned by the farmer or not. Moreover, the value of capital in the classical sense (as a factor of production) was used as a dependent variable. In this case, the value of land was subtracted from the value of assets (SE436-SE446). This approach resulted from the intention to possibly identify the impact (in the comparative, indirect sense) of the value of land on the relationship under study. Because there is an intrinsic growth in the value of the land, this complicates the analysis of the relationships between income and assets. This problem is confirmed by many research results [44,45].
The selection of explanatory variables for the panel models was dictated by substantive considerations. The idea was to include, in addition to the agricultural income variable (SE420) and variables related to the context of economic and environmental sustainability, control variables that have a reasonably consistent theoretical economic impact on the relationships under study [46]. Therefore, the variable of acreage of arable land (SE025), liabilities (long and short term, SE485) and the share of fixed assets to total assets (SE441/SE436) were employed [47,48].
In the analyses, the context of economic and environmental sustainability was taken into account. The economic sustainability was estimated based on income per 1 hour of work by the farmer's own family. The level of this income was then compared with the median income of the analysed group of EU countries for a given year. If it was higher than the median, then such an observation was considered to be economically sustainable. Thus, economic sustainability is contractual here. A similar approach can be noted in the case of estimating the socalled sustainable value and setting the benchmark [49].
Environmental sustainability was established based on two sub-measures: the share of cereals in the sowing structure and the intensity of animal stocking per 1 ha of utilised agricultural area (UAA). The choice of these measures was because their use allowed a determination of threshold values that enabled the critical values to be set for the given areas of sustainability. Regarding the share of cereals in the sowing structure, the measure should not exceed 66%. For the stocking density, values in the range of 0.5-1.5 so-called large livestock units [43] per 1 ha UAA are desirable, which is conducive to maintaining appropriate fertiliser management on farms [50,51]. Hence, these two proposed metrics for environmental sustainability represent both the issues surrounding the diversity of agricultural production and excessive pressure on the environment. This does not mean that they comprehensively address environmental sustainability. However, in the context of the adopted research objectives, this should not be a problem. Furthermore, the applied approach was driven by the availability of data at such an aggregate level.
In the analyses, the original data of the FADN system have been deflated, because indices of changes in income and means of production derived from EUROSTAT data have been applied. In addition, the purchasing power of currency exchange rates was taken into account to eliminate the impact of nominal changes to the exchange rate. At the same time, due to significant variability in economic data of farms, three-period moving averages were used. In the calculation, the mean of the value of the analysed variable for the current year and the previous and next year were employed. For the outlier years i.e. 2004 and 2018, the means respectively, of 2004-2005 and 2017-2018 were applied in order not to lose time series information. In this way the seasonality of data has been reduced.
The explanatory variables in the models were verified by the variance inflation factor (VIF) test for collinearity. Values exceeding 10 indicate the appearance of a collinearity problem. In all models included in the study, the VIF test values did not exceed 5, which means that this problem did not occur in the analysed models [52].
The spatial range of the research concerns agricultural holdings from the EU21 countries. From the group of 25 countries, which have been EU members since at least 2004, Cyprus and Malta were excluded due to the marginal importance of their agriculture in the EU. Following preliminary analyses (Fig 2), farms from Denmark and Slovakia were then omitted because those farms recorded high asset values alongside negative agricultural income in the analysed period (2004-2018). Additionally, their farm income showed very high variability. Such effect also distorted the analyses due to the significant levels of achieved values in terms of both income and assets.

Econometric strategy
The scatter diagram (Fig 2) helped in selecting appropriate forms of functions for models relating to the relationship between income and assets for the examined panel of farms. The analysed observations were concentrated in the lower income and assets value range. Herein, increasing income was accompanied by growing changes in the value of assets. There were, however, quite a few units that were outliers, e.g. farms in Slovakia and Denmark, wherein, especially in some years in the first decade of the 21st century, there were situations where negative income was accompanied by high asset values. From Fig 2 it follows that the most appropriate function for panel regression was an exponential type of function.
The linear functions provided a weak fit to the empirical data, and there was a problem with insignificance with some variables. For the power functions, the fit of the models to the empirical data was similar to the exponential function, but there was statistical insignificance
https://doi.org/10.1371/journal.pone.0265128.g002 of the variables in some cases. In the case of an exponential function: after being bilaterally logarithmised, it becomes: where x 1, x 2. . . are explanatory variables, β 0 -is the intercept; β 1 -structural parameter; ε it −random error. When we have exponential function, then assets change relatively with the income scale. So increasing income has a different effect on the value of farm assets, depending on the scale of income [18,53]. The exponential function reduces the problems associated with the variance of the random component and the normality of the distribution. Moreover, it allows for more accurate models.
The econometric models were estimated via the panel data, assuming that the development of a dependent variable influences, in addition to the explanatory variables, non-measurable, time-fixed and object-specific factors called 'group effects' [54]. In this case, because there are often individual effects, fixed (which we can assign to specific objects) or random panel models with fixed effects (FE) and random effects (RE) are used. The advantage of panel data is that we can control the heterogeneity in the model by considering heterogeneity as constant or random, which solves the endogeneity problem.
To choose an appropriate estimation method, the heteroskedasticity of the random component was assessed. In all analysed models, based on Hausman tests (p < 0.05), the null hypothesis of a model with RE was rejected in favour of a model with FE. The rejected model with RE is due to significant across farm differences between the EU countries due to the existence of individual effects. The Wald test was also applied to assess the heteroskedasticity of the random component and the Breusch-Pagan (Br.-Pag.) test [55] was employed to check the constancy of variance of the random component, as well as to verify between classical least squares method estimation and random effects.
In econometric studies the panel model with fixed effects is most often used (also in this paper):Ŷ where: β0 -is the intercept; β 1 -structural parameter; x-explanatory variable; u i −individual effect, ε it −random error. In a panel model with fixed effects, fixed individual effects are eliminated by averaging the model over time (index t) [56]. The Beck-Katz panel-corrected standard error procedure was applied, as this allows us to reduce problems linked to the autocorrelation of the random component.
The use of panel models resulted from the possibility to assess the studied relationships, also taking into account economic, environmental sustainability and control variables. In addition, the use of panel models provides an opportunity to select the form of the function, which was in the article, an exponential function (cf. further consideration).

Research results and discussion
Descriptive statistics indicate significant differentiation of the studied group in terms of the examined variables ( Table 2). All in all, there is a tendency to increase at farm level the value of assets, the capital, agricultural area and, to a lesser extent incomes in the EU countries. As a consequence, we have weakening of the relationship between income and the value of assets.
The relationship between assets and income in the group of studied farms turned out to be statistically significant (Table 3). An increase in income by one unit caused an increase in assets by 0.000328%. Furthermore, the variation in assets across countries was much higher than that within the given units (time variable). Hence, the fit of the R2-within model reached a higher value than that of the R2-between model. Higher R2-within is due to the significant heterogeneity of farms and the associated inertial nature of changes in production structures over time. Share of fixed assets to total assets (%) 0.8 0.57 0.95 0.12 Source: own calculation based on data of the FADN system (S2 Table), n = 315 https://doi.org/10.1371/journal.pone.0265128.t002 (a)-com. methodological section; the values of the coefficient after standardisation are written in italics when the variable was statistically significant (< 0.05) � capital = total assets-value of land Source: own calculation based on data of the FADN system (S2 Table), n = 315 The regression coefficient for income indicates decreasing scale effects (Table 3). So changes in income values are accompanied by growing changes in assets. Farmers, therefore find it is increasingly difficult in EU countries to generate income effects. Herein, income requires increasing investment outlays, and thus more and more assets, which is linked to decreasing marginal effects. Decreasing marginal effects also result from the run and the exponential function. The point here is that unit changes in income are accompanied by the same percentage changes in assets. Consequently, there is an increasing relationship between changes in assets and changes in income.
In the case of agriculture in EU countries, the faster growth of assets than income is additionally reinforced by increased animal welfare and environmental requirements. Such situation enhanced the importance of non-productive assets. In addition, the intrinsic growth in the price of agricultural land does not result from increasing in productivity with regard to this resource or from inflationary processes [41]. As increase in the value of assets in agricultural holdings results from intrinsic growth in the value of the land, an increase in the importance of non-productive assets or new land utilities is not conducive to an improvement in the income situation. However, the enhanced value of assets by intrinsic growth makes farmers' creditworthiness increase in terms of securing credits with agricultural land.
In light of previous considerations, a question may arise about the direction of influence of the two sustainability dimensions (economic and environmental) on the relationship between income and assets. The research shows that they have different influences on the value of assets in the group of studied farms. While economic sustainability favours the increase of assets, for environmental sustainability, from the perspective of the share of cereals in the sowing structure and the intensity of animal stocking, the effect is negative. Stronger pro-environmental incentives, including the conditionality of direct payments under the CAP instruments, will reinforce this impact in the future, and at the same time, it will weaken the relationship between income and assets.
The challenge for science here is to identify the impact of pro-environmental incentives on the environmental sustainability of farms and the possible competitiveness of food production in the EU countries compared to other countries. For example, strong asset value responses were recorded for the acreage of the UAA and the value of liabilities in the surveyed farms. Still, for the variable share of fixed assets to total assets, the effect was negative and slightly weaker than for income.
In the case of liabilities, the point is that indebtedness in agriculture is not high compared to other sectors, and the dominant sources of asset creation are agricultural income, subsidies, as well as growth in land value. The data in the Report of the European Commission [57] reveal that, in 2015, did the debt rate (debt/asset value) exceeded 35% only in the agriculture practised in Denmark, France and Slovakia. In contrast, for 11 member countries, the rate did not surpass an average of 10%, which is a very low value.
It should be noted that, as indicated by Barry et al. [58], farmers prefer their own resources in the hierarchy of sources for financing their agricultural activity. In such situation, a small increase in indebtedness may impact relatively high on assets (the importance of the base effect). At the same time, there is a risk that under conditions of increased debt, and farmers' use of agricultural land as collateral for debt, a wealth effect may arise. Agriculture in the USA, for example, had experienced increasing debt in the 1980's, resulting in bankruptcies [59]. In contrast, the very high importance of the UAA on the formation of assets is related to direct payments, which are a function of the UAA. Moreover, such a large impact from the arable area results from the fact that part of the arable area (that owned by the farmer) is included in the asset value.
A negative effect of the share of fixed assets to total assets on the value of assets was also noted. The increase of fixed assets limit flexibility of production processes to market conditions. Land is still a basic production factor in agriculture, and its non-productive utilities are, to a greater extent, valorised by the EU CAP instruments more than they were previously. Non-productive amenities influence the heightened value of land. In turn, current assets, directly generated production effects are important elements of the economic basis of farm functioning. They allow for a direct translation into the volume of production and income, and then, through investments, into the accumulation of assets. As shown by the research Skarżyńska et al. [60] conducted on farms in Poland and Lithuania, a higher share of fixed assets in these countries resulted in much lower capital efficiency (more than two times).
Analysis related to capital as dependent variable allow evaluating the assessed relations, excluding the influence of the intrinsic growth increase of the value of assets resulting from changes in land prices. We can observe a more accurate fit to empirical data in model with capital as dependent variable (Table 3). Hence, in such model we have a more clear relationship with the examined dependencies. The increase in the value of assets is also associated with rising land prices (issue of capitalization of subsidies, speculative effect), which weakens the relationship between income and assets. Therefore, excluding land values improved the fit of the models.
The presented processes have their origin in the support instruments of the CAP. There are two issues that are involved: firstly, the capitalisation of subsidies in the price of agricultural land; secondly, such an asset is a safeguard for the implementation of the environmental and social functions of agriculture. The latter was already initiated in the CAP reform of R. Mac-Sharry in the 1990s and was strengthened in the next reforms [61]. To an increasing extent, assets on farms are non-productive due to the need to meet certain environmental welfare standards, which is a condition for receiving payments under the Common Agricultural Policy. Thus, assets generate income to a lesser extent. On the other hand, farms can create public goods and thus also influence the social dimension of agricultural activity.
The research allowed for verification of H1. Thus, the relationship between income and assets is positive, statistically significant, but not very clear compared to the relative impact of other variables such as utilised agricultural area or liabilities in the surveyed group of agricultural holdings. The researched farms operate under conditions of decreasing marginal effects, which means that more and more assets are needed to generate unit income. The assets of agricultural holdings increasingly have a non-productive character relating to the provision of higher requirements for the welfare of the environment, as well as animals, safety, and work comfort. The relationship between income and assets is weakened by the intrinsic growth in the value of the land, which leads to an increase in asset accumulation. The reasons for this process are capitalisation of the subsidies in the heightened value of land and the valorisation of additional land amenities. Furthermore, farmers have greater difficulties in generating income, while there is an intrinsic growth accumulation of assets which does not directly increase their income. In the case of H2, positive confirmation has been made. Economic sustainability has favoured the relationship between income and assets in the group of studied farms. Still, in the case of environmental sustainability (H3), the impact was indeed negative, but this is not of clear statistical significance. So the impact of sustainability on the studied relationship is contradictory, therefore complex, and requires further research. This work also indicates that out of all the control variables, acreage, liabilities and decoupled subsidies had a positive effect on the relationship between income and assets. In contrast, the share of fixed assets to total assets had a negative effect due to the low flexibility of the farms' production apparatus.
The conducted analyses may suggest that possible contradictions between economic and environmental goals should be mitigated through the CAP instruments. Two possible solutions are to offer green investment grants co-financed from the EU budget or support for the development of alternative energy sources.
The examined relationships will be loosened in the future, which will create challenges for agricultural producers. Among these is the wealth effects associated with agricultural producers' beliefs about the rise in asset value being due to the intrinsic growth in land value. Such a wealth effect generates increasing speculation in agriculture, especially in the new Member States (Single Area Payment Scheme-SAPS of direct payments place there). With a view to limit the capitalisation of subsidies in the price of agricultural land, a system of direct payments more closely linked to environmental objectives should be considered, as well as a greater degressivity of direct payments in the CAP.

Conclusions
Referring to the aim of the article, the relationship between farm income and assets in the EU21 countries was found to be statistically significant, but not very clear. Furthermore, this was positively influenced by economic sustainable development. In the light of the presented research results, we can conclude that farmers become wealthier in terms of value of assets, on the other hand, this is not reflected directly in their income. Therefore, non-agricultural rural development is also important because of its potential to diversify the farm family's income and thus reduce the economic effects of the declining marginal effects of farm operations for income. Thus, the relationship between income and assets, at least at the farm level, is more complex than it might seem in light of Piketty's [13] results, exposing the issue of assets. Increasing asset value does not yet guarantee increase of income which is related to the growing importance of environmental and social functions in the agriculture of the European Union countries. Non-productive assets are, therefore, increasingly important, and in addition there is a capitalisation of subsidies in the price of agricultural land. Both non-productive assets and capitalization of subsidies require greater qualifications and knowledge in asset management at farm level. Assuming that farmers are rational in their decisions under existing constraints, e.g. informational, the identified relationship between income and assets, reflect a rational choice given the circumstances.
Whether there is a conflict between the economic (high income, larger assets) and environmental objectives in agricultural holdings in terms of the impact of economic and environmental sustainability on the studied relationship, is not clearly resolved. The implication is that farm management is becoming increasingly complex. Due to existing decreasing marginal effects, farmers find it more and more difficult to generate parity income. The mentioned complexity results mainly from policies, also changing of external conditions and has a direct influence on managing a farm. The complexity of the decision process may lead to non-optimal decisions and hurt some farmers (with less education, experience or resources). So improving the education of farmers reduces these problems.
Higher farm's asset values limit entry for new farmers. Therefore, these problems indirectly relate to inheritance, the generational replacement of farmers and social policy. It remains an open question as to whether the possible rising asset costs will be able to be compensated for by a higher income, also as a consequence of improvement of asset management or possible environmental welfare compensation from the EU CAP instruments.
Further research in the analysed areas should refer to microeconomic analyses at the level of regions with different levels of development. The social dimension of sustainability, including consideration of human capital and income distribution, is interesting. A challenge is to determine the impact of climate change on the examined relationship [62]. Climate change will be associated with an even higher asset intensity of income (the need to invest in sprinklers, the costs of adapting livestock buildings).