The New Economics Foundation looked at 143 countries, and devised an equation that evaluates life expectancy and people's happiness against their environmental impact.
The foundation ranks Costa Rica as the happiest, greenest country in the world, followed by Dominican Republic at the second place, reports the News.com.au
The Latin American countries have booked nine of the top 10 spots in the survey. However, some of the major Western nations did poorly, with Britain being mentioned at 74th place, Australia at 102nd and the US at 114th.
The survey report suggests that Costa Ricans have a life expectancy of 78.5 years, and 85 per cent of the country's residents admit that they are happy and satisfied with their lives.
Sociologist Andrea Fonseca said that Costa Rica gives its citizens the 'tools' to be happy. She added that the country's rise to the top of the Happy Planet Index 'has a lot to do with social imagination'.