The environment has been deteriorated at a rapid pace during the twentieth and twenty-first centuries. Circular economy and sustainability have become popular as possible answers to challenges of the environment and society. The article is based on the relationship between environmental economics and circular economy. Further, the fundamental principles that have to be understood for sustainable development have been explored. According to Environmental Economics, it is crucial to put prices for resources and, also, to include the costs that are given to the environment. Conversely, circular economy signifies a sustainable economic model. It seeks to minimize waste and maximize resource utilization. In this work, authors seek to examine whether it is possible to bridge these two fields and whether the principles of the two fields combined can be a basis for new approaches to tackle the global environmental problems, increase the economic stability and promote sustainable development. Case studies and review of literature have been used to demonstrate how this approach can be the first step to developing sustainable, circular and fair economies and hence assist in the creation of a sustainable and progressive thinking world economy. The findings of the current literature are utilized to develop a broad understanding of the association between environmental economics and circular economy. This has been demonstrated through studying the industrial symbiosis model in Denmark, the energy programme of Sweden, the circular economy model of Steelcase and electric mobility in China. Emphasis has been made on how these two concepts can be integrated so as to achieve sustainable development. Insights of this work will be beneficial to policy makers, organizations and practitioners who are seeking for a sustainable integration of environmental economics and circular economy.