Innovation triggers images of groundbreaking, transformational inventions. The Internet and online access, smartphones, CRISPR, and, most recently, artificial intelligence all come to mind. However, innovations, large and small, make the world a better, cleaner place. Hotels have found efficient ways to recycle water, reducing usage and cost.¹ Light-emitting diodes (LEDs) use 90 percent less energy and last 25 times longer than their incandescent counterparts.²

The availability of Wi-Fi, smartphones, and AI has spawned countless innovations that improved economic well-being and solved environmental challenges. AI has helped optimize building energy use based on weather, people in the building, and time of day.³ At Princeton’s Plasma Physics Laboratory, scientists and researchers are using AI to help with the viability of fusion power – a potentially massive innovation for nuclear energy.⁴ Whether it is a digital sprinkler system controlled via an app⁵ or advanced geothermal energy using hydraulic fracturing methods to unlock clean, dependable anywhere, innovation begets more innovation.

In comparing the Index of Economic Freedom with the World Intellectual Property Organization (WIPO)’s Global Innovation Index (GII),⁶ one finds a strong, positive correlation (0.757). Furthermore, we find that a country’s GII score has a strong, positive relationship with Yale’s Environmental Performance Index (0.741).

Economically free countries empower innovators to thrive. Business freedom, property rights, government integrity, and economic freedom broadly drive innovation, research and development, and technological breakthroughs. Innovation leads to cleaner energy sources, more efficient transportation modes, and more cost-effective emissions reductions.⁷ These benefits, in turn, lead to higher economic growth and fewer pollution-related deaths.

On the other hand, restricting free-flowing commerce, however, drives up the cost to enter the market, shrinks competition, and entrenches leading businesses. Cronyism and preferential treatment between agencies and private contractors or poor oversight of spending can lead to fraud, mismanagement, and abuse. This not only stalls innovation progress but also erodes public confidence in institutions and increases the cost of economic activity. There is also evidence that too much government spending and industrial policy can crowd out private investments, where companies redirect resources away from green innovation.⁸

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Because free economies are wealthier, more innovative and have access to advanced technologies that enable people to better adapt to climate change. Having the economic means to construct stronger levees, sea walls, and more resilient infrastructure has helped save lives and protect communities. Advanced technologies such as early detection systems, visualization tools, up-to-date flood maps, computer modeling, satellites, and radar are several tools that scientists employ to track weather and storms. Researchers are developing crops that better withstand heatwaves and droughts.⁹

Open markets expand access to these products. Home builders in the U.S. can install more weather-resilient glass made by a French company with higher-performance concrete from Mexico.¹⁰ Price signals and accurate risk assessment can help societies adapt to everything from food production to flood insurance.¹¹ The absence or distortions of those markets where prices do not reflect the true risk can weaken resiliency efforts.¹²

One way of measuring a country’s resiliency is the Notre Dame Global Adaptation Initiative’s Country Index. The index “uses 20 years of data across 45 indicators to rank over 180 countries annually based on their level of vulnerability, and their readiness to successfully implement adaptation solutions.”¹³ Unsurprisingly, there is also a strong, positive correlation between those countries that are most economically free and those countries that are the most resilient.¹⁴

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1. One Planet Network, “Innovative Greywater Recycling in Hotels,” One Planet Network, September 30, 2022, https://www.oneplanetnetwork.org/knowledge-centre/resources/innovative-greywater-recy-cling-hotels[↩]
2. Lighting choices to save you money | Department of Energy, accessed December 5, 2024 https://www.energy.gov/energysaver/lighting-choices-save-you-money[↩]
3. EA, “Case Study: Artificial Intelligence for Building Energy Management Systems – Analysis,” IEA, June 20, 2019, https://www.iea.org/articles/case-study-artificial-intelligence-for-building-energy-management-systems[↩]
4. Angela Dewan “Scientists Say They Can Use AI to Solve a Key Problem in the Quest for Near-Limitless Clean En-ergy,” CNN, February 21, 2024, https://www.cnn.com/2024/02/21/climate/nuclear-fusion-ai-climate-solution/index.html[↩]
5. Nathalie Voit, “This Digital Sprinkler System Will Help Cut Your Water Bill in Half,” C3 Solutions, October 7, 2024,https://c3newsmag.com/this-digital-sprinkler-system-will-help-cut-your-water-bill-in-half/[↩]
6. The Global Innovation Index (GII) measures a country’s innovation score based on 80 indicators. 64 are hard data, 11 are composite indicators, and five are survey questions (three from the World Economic Forum’s Execu-tive Opinion, two from the Global Entrepreneurship Monitor’s National Expert Survey (NES)). For more detailed information on the GII’s indicators see: https://www.wipo.int/edocs/pubdocs/en/wipo-pub-2000-2023-appen-dix3-en-appendix-iii-global-innovation-index-2023.pdf[↩]
7. 18 Enrico Cagno, Andres Ramirez-Portilla, and Andrea Trianni, “Linking energy efficiency and innovation practices: Empirical evidence from the foundry sector,” Energy Policy, August, 2015, https://www.sciencedirect.com/sci-ence/article/abs/pii/S0301421515000968[↩]
8. 19 Ying Liu a et al., “How Does Green Industrial Policy Affect Corporate Green Innovation? Evidence from the Green Factory Identification in China,” Energy Economics, November 15, 2024, https://www.sciencedirect.com/sci-ence/article/abs/pii/S0140988324007564[↩]
9. 20 Press release, “Clemson researchers continue study to develop heat-tolerant soybeans,” Clemson News, January 27, 2022, https://news.clemson.edu/clemson-study-focuses-on-developing-heat-tolerant-soybeans/ and Heidelberg University, “Scientists Have Created Genetically Modified Drought-Resistant Plants,” SciTechDaily, July 20, 2022, https://scitechdaily.com/scientists-have-created-genetically-modified-drought-resistant-plants/[↩]
10. Patrick Brown, “Defending Economic Productivity and Capitalism for Climate Adaptation and Mitigation,” The Breakthrough Institute, September 16, 2024, https://thebreakthrough.org/journal/no-20-spring-2024/defend-ing-economic-productivity-and-capitalism-for-climate-adaptation-and-mitigation[↩]
11. Sarah E. Anderson et al., “The Role of Markets in Climate Change Adaptation,”, NBER, May 2018 https://www. nber.org/system/files/working_papers/w24645/w24645.pdf[↩]
12. https://www.insurancejournal.com/blogs/2021/03/17/605847.htm[↩]
13. University of Notre Dame, Notre Dame Global Adaptation Initiative (ND-GAIN), July 2022, https://gain.nd.edu/our-work/country-index/[↩]
14. Nick Loris et al., “Climate and Freedom Agenda,” Conservative Coalition for Climate Solutions, June 2022, https://www.c3solutions.org/wp-content/uploads/2022/06/C3-Solutions-Climate-and-Freedom-Agenda.pdf[↩]