Modeling the Circular Economy Processes at the EU Level Using an Evaluation Algorithm Based on Shannon Entropy

Abstract

In this paper we propose a methodology to study circular economy processes based on mathematical modelling. In open-ended systems, waste could be converted back to recycling, transforming the economy from linear to circular. The concept of entropy and the second law of thermodynamics give the argument for a scale reduction of material circulation. As humans extract more and more energy and matter for the economy, the degree of entropy is likely to increase. Based on the findings of economic studies on the implications of industrialization in the case of growing economies, this study aims at evaluating circular economy processes at the European Union (EU) level using a Shannon-Entropy-based algorithm. An entropy-based analysis was conducted for the 28 European Union countries during the time frame 2007–2016. The modelling process consists of constructing a composite indicator which is composed of a weighted sum of all indicators developed by an algorithm based on Shannon Entropy. The weights assigned to each indicator in our analysis measure the significance of each indicator involved in the development of the composite indicator. The results are similar to the international rakings, consolidating and confirming the accuracy and reliability of this approach.