Joel Mokyr, Philippe Aghion, and Peter Howitt won the 2025 Nobel Prize in Economics for their work on innovation-driven economic growth. Innovation spurs technological advancements that improve human flourishing and quality of life. It is also essential for a cleaner environment.  As we remind policymakers in the U.S. and abroad, free economies are clean economies.

Innovation is beneficial for families, businesses, and the environment. When entrepreneurs have the freedom to experiment and profit from better solutions, they invent new technologies or find efficient processes that provide value to consumers and drive economic growth. It is the evolution of capitalist progress that Joseph Schumpeter described as “the perennial gale of creative destruction.” In fact, two of the economists won the Nobel Prize for their work on how creative destruction produces sustained economic growth. Philippe Aghion of Collège de France, INSEAD, and the London School of Economics, and Peter Howitt of Brown University, built a mathematical model for creative destruction. 

In the latest Free Economies report, we provided a simple example of this.  The progression from maps to MapQuest and then to apps and voice navigation is one of the countless ways technology and innovation improve our lives and make the planet a little cleaner. More precise navigation saves people time and money, and for those who hate getting lost, personal frustration. They can help drivers avoid tolls or find a more scenic route, and have also positively impacted the environment. The fastest route saves fuel and reduces emissions, optimizing delivery routes for trucks and shipping services. Navigating away from traffic congestion helps to reduce the pollution from idling cars. Even showing directions on foot or by bike incentivizes people to choose a greener mode of transportation.

Importantly, nearly everything we make and do has environmental impacts. Moving from MapQuest to Waze saves paper, reduces gasoline consumption, and lowers congestion and pollution. However, the production of the app and materials used to manufacture devices like the iPhone still require energy. Some studies have shown that, because digital navigation has made driving more convenient, people drive more frequently. Further, the use of navigation apps can increase noise pollution in residential areas, as they reroute drivers away from congested highways.

This isn’t a call to abandon modern conveniences or avoid innovation that has environmental effects. Rather, it highlights the economic and environmental tradeoffs policymakers must consider when shaping environmental policy. Further, curtailing economic freedom in the name of environmental protection often backfires, leaving both people and the planet worse off. 

Every day, people innovate to make the world a better place. The path to a cleaner, healthier planet isn’t through less economic freedom – it’s through more of it, properly structured. When people are free to innovate, create wealth, and demand better environmental quality, they tend to get all three. That’s not just theory – it’s the story of human progress over the past century, and it’s our best hope for tackling environmental challenges in the century to come. As Aghion said in 2023, “I think innovation is the best hope for climate change.”

As it pertains to policy, Bloomberg columnist Allison Schrager provides another key takeaway from reading Joel Mokyr, the third economist to share the Nobel Prize.  She writes, “As the world faces a future of lower growth, there is a temptation among policymakers to have the government take a more active role in the economy. Policy certainly has a role to play. But all governments should realize that abundance doesn’t come from better planning. The crucial element of growth is openness — to risk, uncertainty, change and creativity. That’s the great lesson of Joel Mokyr, and why his work is as relevant as ever.” 

Innovation isn’t just a buzzword; it is truly the driving force behind raising living standards and meeting our environmental ambitions. Policies that enable private sector-led innovation and unleash human ingenuity with minimal government interference will provide massive returns for societal progress and environmental well-being. On the other hand, policies that curtail permissionless innovation, risk-taking, and entrepreneurship can have profoundly damaging impacts on progress.  As Schrager reminds us, growth is not inevitable. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.