By Ariana López Peña

Costa Rica was the most environmentally advanced and happiest place on Earth last year, followed by Mexico, Colombia, Vanuatu and Vietnam.

So concluded the Happy Planet Index, which recently released its 2016 ranking of "where in the world people are using ecological resources most efficiently to live long, happy lives."

That neither the U.S. nor any European nations make the top ten may be surprising, but Costa Rica's winning position is not; this small Central American nation also topped the 2009 and 2012 rankings.

The Happy Planet Index measures life expectancy, well-being, environmental footprint and inequality to calculate nations' success—all areas where Costa Rica's government has made significant effort and investment.

Less War, More Health

In 1949, Costa Rica took a big gamble eliminating its army and investing military funds into health and education. The decision has paid off on numerous fronts.

By 2016, education comprised 8 percent of Costa Rica's national budget—up from 2.6 percent in 1994 and 5.9 percent 2014, according to a 2014 study.

By comparison, nearby El Salvador spends 3.42 percent of GDP on education, the U.S. spends 5.22 percent and Colombia allocates 4.67 percent.

In the environmental realm, Costa Rica has long been a pioneer. In the 1990s, the country passed a series of "green culture" laws including the tax-funded National Forests law that protects forests, waters, biodiversity and natural beauty as both tourist attractions and scientific resources. It also developed a financing system, supported by both the government and by international organizations, such as the World Bank, to pay for environmental protection programs.

Other green initiatives include the Eco-Marchamo, which is a voluntary complementary tax that allows drivers to offset 100 percent of the emissions generated by fuel consumption for one year and the Carbon Neutral Framework that incentives good environmental practice by Costa Rican companies.

Under President Luis Guillermo Solís, Costa Rica's national health policy also now includes the explicit goal of achieving "environmentally sustainable socio-economic development," based on the theory that such growth will better position the small country to face big international challenges, such as health crises, increasing violence and climate change.

In short, Costa Rica has built into its whole governance model the ability to face the major environmental and health challenges facing the world.

As a result, in addition to its top ranking on the Happy Planet Index, Costa Rica also does very well on the Global Index of Happy Workers (at number three), in Doing Business 2017 (at number five) in the region Latin American and on the Individual Liberties Index. Costa Rica is also a leader within Central America in labour rights and ranks among the most competitive economies in Latin America. (There's more, too—you can find it here).

This reveals a key issue highlighted by the Happy Place Index: public policies have a great impact on the well-being of a populace.

Limits to the Rankings

But they're not the only factor and such rankings, while perhaps a point of pride for a tiny Central American nation, have serious limitations.

First, global indexes inevitably include certain indicators and exclude others. This can lead to certain cognitive dissonance. It is notable that among the WEF's top ten "happiest" places are two highly under-developed nations, Vanuatu and Bangladesh. Both not only have low global competitiveness but also do badly on the UN's Human Development Index (134th and 142nd, respectively).

How is it possible for a country to be eco-happy but underdeveloped?

Well, the Happy Planet Index does not look at such indicators as education, income, access to water and electricity or poverty rates. Accounting for those facts would create a more complete, and probably very different, perception of happiness.

Vanuatu, which the Happy Planet Index ranks fourth happiest in terms of sustainability, comes in 134th on Yale University's Environmental Performance Index (EPI), which examines how countries protect human health and the ecosystem. Costa Rica, first on the 2016 Happy Planet Index, ranks 42 place on the EPI. Meanwhile, Ecuador, tenth on the Happy Planet Index, is 76th in global competitiveness, according to the CDI's 2016-2017 rankings, and 103rd on Yale's EPI.

According to the UN's Conference on Trade and Development, the world's least-developed countries are characterized by having deficient per capita income and economic vulnerability. That is, at least 50 percent of the population lives in extreme poverty. They're also the countries that are most exposed to climate change and its consequences.

So is a country that's green necessarily a happy place?

What is Happiness?

The Happy Planet Index is useful in reconceptualizing happiness in terms of environmental well-being and sustainable practices, but it needs fine-tuning.

In underdeveloped countries, a low carbon footprint clearly has more to do with the lack of industry than with environmental policy. These countries simply didn't undergo the same economic growth processes that the rich world did, from the Industrial Revolution through to the second world war.

And it is confusing to talk about happiness in countries where life conditions are not even minimally acceptable. Even the authors of the report on the Happy Planet Index note when discussing Costa Rica that despite its environmental commitment, Costa Rica's ecological footprint is not small enough to be totally sustainable and that its income inequality remains quite high.

The same could be noted of the other top countries in the Happy Planet Index, Mexico and Colombia, whose 2014 GINI ratings of 48.2 and 53.5, respectively, reflect starkly uneven wealth distribution. In fact, Colombia is the second-most unequal country in Latin America, a region characterized by its wealth gap.

Costa Rica has achieved a lot since it turned away from war and toward national well-being a half century ago. But many challenges – from preventing violence to increasing income equality—remain for it to become both green and truly happy.

To create the kind of sustainability that fundamentally links human, environmental and social development, policy, science, education and citizen activism must all work together.

That's how we'll redefine the meaning of happiness—in Costa Rica and beyond.

Ariana López Peña is a professor at the School of International Relations, Universidad Nacional de Costa Rica. Reposted with permission from our media associate The Conversation.