Evaluating the Circular Economy Performance of European Countries: A DEA-Based Approach to Resource Management, Waste Reduction and Innovation

Abstract

Due to the difficulties arising from the traditional model and the environmental limits of ecosystems, a new economic model emerged, known as the Circular Economy (CE). Growing population and consumption have made CE increasingly popular worldwide. It has become a major foundation for promoting sustainable development and reducing the global environmental footprint. As CE continues to expand, particularly among European Union countries, it is important not only to consider how and to what extent these countries incorporate CE into their policies, but also whether and how they achieve efficiency in terms of resource management, waste reduction, and innovation. To address this, the study applies nonparametric Data Envelopment Analysis (DEA) to evaluate the efficiency of 27 EU members based on 2022 data. Both CCR (CRS) and BCC (VRS) DEA models are used across two datasets — one focusing on input aspects (material footprint, import dependencies, and greenhouse gas emissions) and the other on output elements (innovation and recycling rates). The results indicate that countries such as Estonia, Sweden, and the Netherlands are among the most efficient, while Greece and Portugal are labeled inefficient due to high resource consumption and low recycling performance. A linked DEA analysis was also conducted, offering deeper insight into the relationship and potential impact of resource use on circular economy outcomes, particularly in waste management, and confirming that the analyzed dimensions are interrelated and constitute the CE framework. The use of two datasets enables a multidimensional evaluation of best practices and helps identify potential areas where CE policies can be improved.