Circular Pathways to Sustainability: Asymmetric Impacts of the Circular Economy on the EU’s Capacity Load Factor

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The paper addresses a highly relevant topic and makes a valuable contribution to the literature on sustainable development and circular economy policy. Below are some detailed comments that I hope will support further refinement of the manuscript:

Strengths of the Paper:

1. Innovative Approach – The construction of a multidimensional Circular Economy Index (CEI) using entropy weighting is a significant and timely methodological advancement.

2. Methodological Soundness – The use of the Method of Moments Quantile Regression (MMQR) to capture asymmetries and cross-country heterogeneity is both appropriate and well-justified.

3. Policy Relevance – The findings are directly applicable to EU sustainability policymaking, especially in light of the 2050 climate neutrality goals.

4. Clarity of Results – The results are clearly presented, with effective use of tables and figures to illustrate quantile-specific effects.

Suggestions for Improvement:

1. Discussion Section – Consider streamlining parts of the discussion to avoid redundancy and provide a more concise synthesis of the main findings.

2. CEI Construction – It may be helpful to include a schematic or table outlining the four components of the CEI along with their weights. This would enhance transparency and replicability.

3. Style and Language – In a few places, the sentence structure could be simplified slightly to improve flow and readability, particularly in the introduction and conclusion.

4. Future Research – A brief reflection on how the proposed framework might be applied beyond the EU context or adapted to other sustainability metrics would be a valuable addition.

In summary, I believe this is a high-quality manuscript that merits publication after minor editorial revisions. Congratulations on a well-executed and thoroughly researched study.

Author Response

Comments 1: Discussion Section – Consider streamlining parts of the discussion to avoid redundancy and provide a more concise synthesis of the main findings.

Response 1: We sincerely appreciate the reviewer’s insightful suggestion regarding the discussion section. In response, we have revised the section to improve clarity and reduce redundancy. A new, focused subsection now synthesizes the key findings more concisely, emphasizes policy implications, and better aligns the results with the study’s objectives and theoretical contributions see pages 18-20.

Comments 2: CEI Construction – It may be helpful to include a schematic or table outlining the four components of the CEI along with their weights. This would enhance transparency and replicability.

Response 2:   Thank you for this helpful recommendation. We have incorporated a schematic table (Table 1) that outlines the four core components of the Circular Economy Index (CEI), their associated indicators, measurement methodologies, and assigned weights based on entropy-weighting. This addition enhances the transparency and reproducibility of our index construction methodology. See pages 6-8.

Comments 3: Style and Language – In a few places, the sentence structure could be simplified slightly to improve flow and readability, particularly in the introduction and conclusion.

Response 3:   We fully agree with the reviewer’s observation. Accordingly, we have revised the introduction and conclusion to improve sentence flow and clarity. We removed overly complex structures, streamlined key arguments, and ensured consistency in tone and terminology throughout these sections.

Comments 4: Future Research – A brief reflection on how the proposed framework might be applied beyond the EU context or adapted to other sustainability metrics would be a valuable addition.

Response 4: We thank the reviewer for highlighting this important point. In the conclusion section, we have added a dedicated paragraph discussing potential applications of the CEI framework beyond the EU. Specifically, we reflect on how the index could be adapted to emerging economies or regional sustainability assessments, and how the methodology could be extended to incorporate alternative environmental metrics such as the Ecological Footprint or SDG indicators. This addition expands the relevance and transferability of our findings. See pages 21-23

Reviewer 2 Report

Comments and Suggestions for Authors

• Strong Methodological Rigor but Overstated Novelty (p.2, lines 75–79):
  The use of Method of Moments Quantile Regression (MMQR) is appropriate and sophisticated, particularly for dealing with distributional heterogeneity. However, the claim that this is the first empirical study exploring the CE-LCF relationship in the EU is overstated. Similar distribution-sensitive approaches (e.g., QARDL, AMG) have been applied to CE impacts in European contexts. The authors should temper claims of novelty and better situate their work within existing econometric literature.

• Lack of Justification for Index Construction (p.7, lines 258–273):
  While the composite CEI index offers multidimensional value, there is limited transparency regarding the entropy weighting process. What criteria determined the chosen indicators’ relevance or weight? Providing the exact formula and robustness tests for the CEI would enhance replicability and rigor.

• Policy Implications Are Insightful but Need Further Nuance (p.13, lines 470–490):
  The discussion linking negative CEI shocks to disproportionate LCF declines in high-performing countries is compelling. However, the manuscript does not sufficiently explore why such asymmetric vulnerability exists. Could path dependency or institutional fragility in advanced systems explain this? A deeper engagement with environmental economic theory would be beneficial.

• Employment’s Strong Negative Effect Seems Counterintuitive (Table 6; p.15):
  Employment consistently exerts a large negative effect on LCF, with elasticities exceeding -6.0. This is surprising and requires clearer theoretical justification. Does this reflect labor intensity in unsustainable industries, or a proxy for economic activity? Alternative model specifications or robustness checks may clarify this.

• Literature Review Could Be Broadened (p.4–6):
  While the literature review is extensive, it lacks coverage of critiques of the circular economy paradigm (e.g., rebound effects, limits to scalability). Including dissenting views would provide a more balanced foundation for the research and highlight where this study offers value.

Author Response

Comments 1: Strong Methodological Rigor but Overstated Novelty (p.2, lines 75–79):

The use of Method of Moments Quantile Regression (MMQR) is appropriate and sophisticated, particularly for dealing with distributional heterogeneity. However, the claim that this is the first empirical study exploring the CE-LCF relationship in the EU is overstated. Similar distribution-sensitive approaches (e.g., QARDL, AMG) have been applied to CE impacts in European contexts. The authors should temper claims of novelty and better situate their work within existing econometric literature.

Response 1: We sincerely appreciate the reviewer's thoughtful observation regarding our methodological positioning and claims of novelty. We have revised our positioning to more accurately reflect our study's distinct contributions while appropriately acknowledging related work in the field. Our analysis differs from previous studies in several key dimensions:

• First, methodological distinction: While Tiwari et al. [22] employed quantile Autoregressive Distributed Lags (QARDL) and panel PMG models, their focus was on emerging economies rather than the European Union context. Our application of Method of Moments Quantile Regression (MMQR) specifically addresses the unique institutional and policy framework characteristics of EU member states, where shared environmental policies and economic integration create different dynamics than those observed in emerging economy contexts.
• Second, environmental metric advancement: Previous studies, including Tiwari et al. [22], primarily utilized CO2 emissions as the environmental sustainability metric. Our study employs the Load Capacity Factor (LCF), which provides a more comprehensive assessment of environmental sustainability by incorporating both environmental degradation (CO2 emissions) and environmental restoration capacity (biocapacity). This composite approach captures the net environmental impact more accurately than single-dimension carbon metrics.
• Third, comprehensive circular economy measurement: Our study introduces a multidimensional Circular Economy Index (CEI) that captures production, consumption, waste management, and secondary material utilization simultaneously. This represents a methodological advancement over studies that focus on individual circular economy dimensions or use simpler proxy measures.
• Fourth, shock-specific analysis: The disaggregation of circular economy impacts into positive and negative shocks reveals asymmetric effects that have not been systematically explored in the European context, providing new insights into the differential vulnerabilities and opportunities across the sustainability distribution.

Comments 2: Lack of Justification for Index Construction (p.7, lines 258–273):

While the composite CEI index offers multidimensional value, there is limited transparency regarding the entropy weighting process. What criteria determined the chosen indicators’ relevance or weight? Providing the exact formula and robustness tests for the CEI would enhance replicability and rigor.

Response 2:   Thank you for this helpful recommendation. We have incorporated a schematic table (Table 1) that outlines the four core components of the Circular Economy Index (CEI), their associated indicators, measurement methodologies, and assigned weights based on entropy-weighting. This addition enhances the transparency and reproducibility of our index construction methodology. See pages 6-8.

Comments 3: Policy Implications Are Insightful but Need Further Nuance (p.13, lines 470–490):

The discussion linking negative CEI shocks to disproportionate LCF declines in high-performing countries is compelling. However, the manuscript does not sufficiently explore why such asymmetric vulnerability exists. Could path dependency or institutional fragility in advanced systems explain this? A deeper engagement with environmental economic theory would be beneficial.

Response 3: We thank the reviewer for highlighting the need to unpack the theoretical underpinnings of our asymmetric vulnerability findings. In response, we have substantially expanded Section 5 (pp. 18–20) by:

• Introducing a focused subsection on institutional dynamics: We discuss path-dependency in mature circular-economy systems—how long-standing infrastructures, regulatory frameworks, and vested interests can create rigidity, making advanced economies especially sensitive to sudden reversals in CEI. We draw on the concept of institutional fragility, showing how tightly coupled governance and industry networks in high-LCF states may lack the flexibility needed to absorb negative shocks without significant ecological fallout.
• Linking to environmental-economic theory: We incorporate insights from hysteresis and lock-in effects to explain why, once certain circular practices are entrenched, any rollback can produce outsized impacts on sustainability metrics. We reference empirical studies on rigidity traps in resource-intensive sectors to illustrate similar dynamics in other policy domains.
• Enhancing policy discussion with nuanced strategies: Building on these theoretical foundations, we recommend tailored resilience measures—such as modular infrastructure design and adaptive governance mechanisms—to prevent brittle system responses.

Together, these additions deepen the theoretical rationale for our empirical results and strengthen the link between observed asymmetries and established environmental-economic frameworks. Thank you for prompting this important elaboration.

Comments 4: Employment’s Strong Negative Effect Seems Counterintuitive (Table 6; p.15):

Employment consistently exerts a large negative effect on LCF, with elasticities exceeding -6.0. This is surprising and requires clearer theoretical justification. Does this reflect labor intensity in unsustainable industries, or a proxy for economic activity? Alternative model specifications or robustness checks may clarify this.

Response 4: We appreciate the reviewer’s request for greater theoretical grounding and additional robustness analysis regarding the unexpectedly strong negative employment–LCF relationship. In the revised manuscript, we have:

• Enhanced theoretical discussion (pp. 16): We introduce two complementary frameworks—the Environmental Kuznets Curve and structural‐change theory, which explain how early stages of job‐focused growth can degrade environmental quality until labor shifts toward lower‐impact service sectors, and the just‐transition literature, which highlights “lock‐in” effects when workers lack retraining opportunities, causing persistent reliance on carbon‐intensive industries.
• Robustness checks(pp. 17): To verify our findings, we employed Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) regressions alongside the MMQR approach. Across all these alternative models, employment continues to exhibit a strong negative elasticity with LCF, confirming the robustness of our main result.

These additions clarify why higher aggregate employment can coincide with lower environmental sustainability in the EU context and demonstrate that the negative employment–LCF effect is both theoretically grounded and empirically robust.

Comments 5: Literature Review Could Be Broadened (p.4–6):

While the literature review is extensive, it lacks coverage of critiques of the circular economy paradigm (e.g., rebound effects, limits to scalability). Including dissenting views would provide a more balanced foundation for the research and highlight where this study offers value.

Response 5: We appreciate the reviewer's insightful feedback regarding the need to broaden the literature review to include critiques of the circular economy paradigm. In response, we have expanded the literature review to discuss key challenges associated with CE, such as rebound effects, scalability limitations, and socio-economic implications. These additions provide a more balanced perspective and highlight areas where our study contributes to the ongoing discourse on CE implementation. See pages 4-5.

 

Reviewer 3 Report

Comments and Suggestions for Authors

Please reorganize the manuscript at the journal request. Please change the reference format.

The language of this manuscript is very bad and needs help from native speakers.

The title of the manuscript should fully demonstrate the content of this study and the relevant subjects.

Abstracts should include the purpose and findings of the study.

What authors wanted to convey. Here author must build research gap following the previous studies.-The manuscript does not answer the following concerns: Why is it timeliness to explore such a study? What makes this study different from the previously published studies? Are there any similarly findings in line with the previously published studies? Are the findings different from prior academic studies that were conducted elsewhere, if any? 

In addition to summarizing the actions taken and results, please strengthen the explanation of their significance. It is recommended to use quantitative reasoning comparing with appropriate benchmarks, especially those stemming from previous work. See the following: The effect of digital green strategic orientation on digital green innovation performance: from the perspective of digital green business model innovation. 

Highlights the importance. See the following: Digital green value co-creation behavior, digital green network embedding and digital green innovation performance: moderating effects of digital green network fragmentation. 

-Methodology: Model.. I suggest authors here build your main heading on Research and data methodology. Clearly explain the model building process, and what previous studies have used similar models (model testing approach). See the following: Enhancing the competitiveness of multi-agent cooperation for green manufacturing in China:An empirical study of the measure of green technology innovation capabilities and their influencing factors

As any emprical study that use different approaches I would like to ask to introduce in the Conclusion section at least a paragraph containing the study limitations. I noticed some things in the paper but a synthesis of statements related to how the study is useful (or partially useful, since are required certain further analysis) and helps potential interested readers does not really exist. Maybe in addition to the last section of Conclusion it is beneficial to introduce a section called: Discussion.

Author Response

Comment 1: Please reorganize the manuscript as per the journal’s requirements. Please change the reference format.

Response 1: We appreciate the reviewer’s observation. The manuscript has been fully reorganized to comply with the structural guidelines of the Land journal. Additionally, the reference list has been reformatted to strictly follow the required citation style throughout the manuscript.

Comment 2: The language of this manuscript is very bad and needs help from native speakers.
Response 2: Thank you for pointing this out. The manuscript has undergone a thorough language revision to improve clarity, grammar, and academic tone. Where appropriate, we consulted native English speakers and used professional language editing tools to ensure the manuscript meets academic writing standards.

Comment 3: The title of the manuscript should fully demonstrate the content of this study and the relevant subjects.

Response 3: We have revised the title to more accurately reflect the study’s scope, key variables, and regional focus. The new title better communicates the content and the relevance of the study to prospective readers and aligns with the journal's expectations.

Comment 4: The abstract should include the purpose and findings of the study.
Response 4: The abstract has been revised to explicitly state the purpose of the study, outline the methodological approach, and summarize the main findings and implications. This revision enhances the abstract's clarity and ensures it effectively conveys the core contributions of the research.

Comments 5: What authors wanted to convey. Here author must build research gap following the previous studies. -The manuscript does not answer the following concerns: Why is it timeliness to explore such a study? What makes this study different from the previously published studies? Are there any similarly findings in line with the previously published studies? Are the findings different from prior academic studies that were conducted elsewhere, if any?

Response 5: We thank the reviewer for this constructive comment. In response, we have revised the Introduction and Conclusion sections to clearly articulate the research gap, the timeliness of our study, and how our findings compare with and contribute to the existing body of literature.

• First, regarding timeliness, our study is situated within the critical context of accelerating environmental degradation, mounting resource pressures, and the EU's intensified commitment to climate neutrality by 2050. Despite ambitious sustainability targets and policy frameworks such as the European Green Deal and the Circular Economy Action Plan, empirical evaluations of how circular economy (CE) initiatives influence broader environmental sustainability—especially through holistic metrics like the Load Capacity Factor (LCF)—remain limited. This research responds directly to the need for evidence-based evaluation of CE implementation outcomes in high-impact regions like the EU, especially in light of the post-COVID recovery and evolving geopolitical risks that may threaten CE progress.
• Second, we have clarified what differentiates our study from existing work. While prior studies often rely on narrow environmental metrics like CO₂ emissions or the ecological footprint (e.g., Tiwari et al., 2024), our analysis introduces a composite LCF metric that accounts for both environmental degradation and regenerative capacity—offering a more holistic measure of sustainability. Additionally, our construction of a novel, multidimensional CEI using entropy weighting captures production, consumption, waste, and circular trade flows simultaneously—advancing beyond single-indicator frameworks. Furthermore, we employ the Method of Moments Quantile Regression (MMQR) to detect heterogeneous and asymmetric effects of CE shocks across the LCF distribution. This combination of methodological sophistication and multidimensional measurement marks a notable departure from existing approaches that focus primarily on conditional mean estimates or homogeneous impacts.
• Third, in terms of positioning within the literature, we explicitly acknowledge that our findings align partially with prior studies—such as those by Chen and Pao (2022) or Kakar et al. (2023)—in confirming that CE practices contribute positively to sustainability. However, our results diverge significantly by revealing strong asymmetries: high-performing EU countries benefit disproportionately from positive CE shocks (a "sustainability premium") but are also more vulnerable to negative shocks, a pattern that has not been previously captured in EU-focused studies. These nonlinear effects provide important insights into policy vulnerability and resilience across different sustainability baselines.
• Finally, the study’s broader value-added is underlined by its global relevance. In the Conclusion, we now discuss how our framework can be adapted to different regional contexts, including MENA and Caribbean countries, where circular economy adoption faces unique socio-ecological and economic challenges. This cross-regional relevance further distinguishes our study as both theoretically grounded and practically applicable.

We believe these revisions comprehensively address the reviewer’s concern and enhance the clarity, contribution, and relevance of our work. Please see the revised Introduction (pages 1–3) and Conclusion (pages 22–24) for these updates.

Comments 6: In addition to summarizing the actions taken and results, please strengthen the explanation of their significance. It is recommended to use quantitative reasoning compared with appropriate benchmarks, especially those stemming from previous work. See the following:

The effect of digital green strategic orientation on digital green innovation performance: from the perspective of digital green business model innovation.

Response 6: We thank the reviewer for highlighting the value of quantitative benchmarking against digital green innovation studies. While our current paper focuses on the CEI–LCF nexus in the EU—rather than digital green business models—we recognize the importance of cross-domain comparisons to contextualize our findings within broader sustainability innovation frameworks. In future research, we will incorporate quantitative performance benchmarks drawn from influential studies such as Yin et al. (2024) on digital green strategic orientation and business model innovation, to situate our circular economy effect sizes within the evolving landscape of green transformation literature.

Comments 7: Highlights the importance. See the following: Digital green value co-creation behavior, digital green network embedding and digital green innovation performance: moderating effects of digital green network fragmentation.

Response 7: We appreciate the reviewer’s insightful suggestion regarding the relevance of network dynamics in sustainability transitions. Although digital green value co-creation and network fragmentation are beyond the scope of this study, we agree that these concepts offer valuable perspectives for understanding systemic sustainability interventions. Specifically, Yin, Zhao, and Yu (2024) provide a compelling framework on digital green network embedding and its impact on innovation performance, which aligns with our interest in system-level circular economy effects. We plan to explore how institutional and policy network fragmentation may moderate circular economy impacts in a dedicated follow-up study, informed by Yin et al. (2024) on digital green co-creation mechanisms.

Comments 8: Methodology: Model. I suggest authors here build your main heading on Research and data methodology. Clearly explain the model building process, and what previous studies have used similar models (model testing approach). See the following:  Enhancing the competitiveness of multi-agent cooperation for green manufacturing in China: An empirical study of the measure of green technology innovation capabilities and their influencing factors.

Response 8: :   Thank you for this helpful recommendation. We have incorporated a schematic table (Figure 1) that outlines the four core components of the Circular Economy Index (CEI), their associated indicators, measurement methodologies, and assigned weights based on entropy-weighting. This addition enhances the transparency and reproducibility of our index construction methodology. See pages 6-8.

Comments 9: As any empirical study that use different approaches, I would like to ask to introduce in the Conclusion section at least a paragraph containing the study limitations. I noticed some things in the paper, but a synthesis of statements related to how the study is useful (or partially useful, since are required certain further analysis) and helps potential interested readers does not really exist. Maybe in addition to the last section of Conclusion it is beneficial to introduce a section called: Discussion.

Response 9: We thank the reviewer for this insightful suggestion. In the revised manuscript, we have:

1. Added a “5. Discussion” Section: Positioned immediately before the Conclusion, this new section synthesizes our findings.
2. Expanded Limitations Paragraph: Within the Conclusion, we now explicitly acknowledge limitations—such as reliance on country-level data, potential measurement error in CEI components, and the 2010–2023 time horizon—and discuss how these constraints temper interpretation.

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

The author has revised the paper and can be accepted in its current form.

Reviewer 3 Report

Comments and Suggestions for Authors

accepted