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 Arthur Pigou and Henri George have been pricing of externalities may improve management of natural capital. In 2017 this analysis will be extended, where also insights of Ronald Coase and Eleonore Ostrom will be included. Transaction costs have an import role in this context: how can management of natural capital be organized in such a manner that sustainable solutions are found with low transaction costs?
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. A case study on the relationship between tap water companies and farmers for management of water as natural capital develops these insights further.
|Effective start/end date||1/01/17 → 31/12/17|