The Washington D.C.-based Heritage Foundation has published an Index of Economic Freedom for three decades. The Index measures economic freedom by scoring each country in the following categories.
- Rule of law: property rights, judicial effectiveness, and government integrity;
- Government size: fiscal health, government spending and tax burden;
- Regulatory efficiency: business freedom, labor freedom, and monetary freedom; and
- Open markets: trade freedom, investment freedom, and financial freedom.
Heritage compiles publicly available data from sources such as the African Development Bank, the Asian Development Bank, the European Commission, the Economist Intelligence Unit, the International Monetary Fund, the World Bank, various U.S. government agencies, Oxford University’s World Economic Outlook, and the World Economic Forum.1
Countries earn aggregate scores and fall into one of five categories: Free, Mostly Free, Moderately Free, Mostly Unfree, and Repressed. In the 2024 Index, only four countries (Singapore, Switzerland, Ireland, and Taiwan) received the most elite designation of “Free” nations, while 22 others, including the United States, fall into the “Mostly Free” category. Another 55 countries are “Moderately Free,” while 62 are “Mostly Unfree.” 33 “Repressed” countries comprise the bottom quintile, with Venezuela, Cuba, and North Korea in the last three spots.
The principles that make a country economically free are also critical to a cleaner environment.
The principles that make a country economically free are also critical to a cleaner environment. One of the most comprehensive measurements of a country’s environmental performance is Yale University’s Environmental Performance Index (EPI). Produced every other year, the EPI similarly scores a country on a 0-100 scale and includes 180 countries in its 2024 report.2
The EPI gives a country a score based on 58 environmental indicators broken down into eleven issue categories. The report’s technical appendix details how the authors weigh each of the eleven issue categories and how the authors weigh each of the environmental indicators.4
The 58 indicators fall into three broader categories consisting of:
- Climate change: climate change mitigation
- Environmental health: air quality, sanitation & drinking water, heavy metals, and waste management;
- Ecosystem vitality: biodiversity & habitat, ecosystem services, fisheries, water resources, acid rain, and agriculture.
Correlating the Index of Economic Freedom and the Environmental Performance Index reveals a strong, positive relationship between economically free economies and clean economies.
Economic Freedom and Environmental Quality: A Strong Correlation
Countries with greater economic freedom tend to have stronger environmental protections, cleaner air and water, and better resource management, driven by higher wealth and market incentives.
Source: Yale University and The Heritage Foundation
Free economies are clean economies for many reasons. Well-defined and legally protected property rights incentivize environmental stewardship. Amazing things happen when people have the freedom to own property, start businesses, and trade freely. They innovate. They create. They find better ways to solve problems. Economic freedom gives people more choices about their lives, from their careers to their living situations to their children’s education. They demand cleaner air, cleaner water, and environmental stewardship. And crucially, with higher levels of wealth because of economic freedom, they have the means to make it happen.