The transformation is particularly significant given the country’s earlier environmental decline. During the second half of the 20th century, rapid agricultural expansion, logging and cattle farming caused extensive forest loss across Costa Rica. By the 1980s, large areas of tropical forest had disappeared, threatening biodiversity, water systems and wildlife habitats.

Instead of continuing down that path, successive governments gradually reoriented the economy around conservation, renewable energy and sustainable tourism.

One of the country’s most internationally praised policies was the creation of a Payment for Ecosystem Services programme in the 1990s. The initiative financially rewarded landowners for protecting forests, restoring ecosystems and preserving watersheds rather than clearing land for agriculture. Funding was partly derived from taxes on fossil fuels, linking environmental protection directly to polluting activities.

Costa Rica also invested heavily in protected natural areas. According to the United Nations Environment Programme (UNEP), roughly a quarter of the country’s territory is now protected through national parks, wildlife reserves and conservation zones, one of the highest proportions in the world.

Although Costa Rica occupies only a tiny fraction of Earth’s landmass, scientists estimate it contains around 5% of the world ’s known species. The country’s rainforests, cloud forests, coastlines and volcanic ecosystems attract millions of tourists annually.

Tourism has become central to Costa Rica’s environmental model. Ecotourism now generates billions of dollars for the economy and provides incentives for conservation by turning biodiversity into a long-term economic asset rather than a resource for extraction.

Costa Rica has also become a global leader in renewable electricity. In recent years, nearly all of the country’s electricity has come from renewable sources, including hydroelectricity, geothermal energy, wind, and solar power, according to the International Energy Agency and Costa Rican energy authorities.

Rather than waiting to become wealthy before investing in environmental protection, Costa Rica expanded its conservation policies while its economy and population were still growing, challenging the idea that sustainability and development must happen separately.

The country’s international reputation has been strengthened further by long-term political stability and public investment in social services. After abolishing its military in 1948, Costa Rica redirected resources toward education, healthcare and public institutions, decisions many analysts believe contributed to stronger environmental governance decades later.

Challenges

Still, Costa Rica faces growing pressures from climate change, urban expansion and rising tourism demand. OECD's environmental performance review for 2023 warned about increasing strain on water systems, coastal ecosystems and infrastructure as visitor numbers continue rising.

Critics also note that while electricity generation is largely renewable, transportation still depends heavily on fossil fuels, and the country remains vulnerable to global economic fluctuations linked to tourism.

Despite those challenges, Costa Rica continues to stand out internationally at a time when many countries struggle to balance economic growth with environmental sustainability.

World Reframed  episode 40.

World Reframed is produced in London by Global South World, part of the Impactum Group. Its editors are Duncan Hooper and Ismail Akwei.

ISSN 2978-4891