Sustainable management of natural capital is one of the important objectives of the circular economy. In the current economy management of natural capital is not sustainable because it has not the right price.
In 2016 the theories of Ronald Coase and Henri George have been used to analyse a case on sustainable groundwater management with the introduction of prices for the use and pollution of groundwater. In 2017 this analysis will be generalized for other cases, where the theory of transaction cost will be an important instrument in the analysis: in which way can institutions for management of natural capital be developed that the cost to develop sustainable solutions, the transaction costs, are as low as possible.
Pricing in the form of taxes may be one of the possible institutions, but other instruments like regulation, property rights definition to allow the market to create prices, information supply or subsidies are alternative institutions. It may be that it is best to combine these institutions. Some cases will be used to test the developed line of reasoning.