Costa Rica punches far above its weight. A country smaller than West Virginia holds roughly 5% of all known species on Earth, generates nearly 95% of its electricity from renewable sources, and achieves a life expectancy of 81 years while spending a fraction of what wealthier nations spend on healthcare. Its importance lies in proving that a small, middle-income country can prioritize the environment, education, and public health over military spending and come out ahead on nearly every measure that matters.
A Tiny Country With 5% of Earth’s Species
Around half a million species live in Costa Rica, a country that covers just 0.03% of the planet’s surface. That means roughly 5% of all estimated species on Earth are packed into an area about the size of Vermont and New Hampshire combined. This concentration makes Costa Rica one of the most biodiverse places anywhere, home to dense tropical rainforests, cloud forests, mangroves, and coral reefs that support an extraordinary range of plants, insects, birds, reptiles, and mammals.
The country hasn’t just inherited this wealth passively. About a quarter of its land is protected in national parks and reserves, and in 2021, Costa Rica expanded the marine protected area around Cocos Island National Park to roughly 55,000 square kilometers of ocean. That protected zone sits in the Eastern Tropical Pacific, where endangered species like scalloped hammerhead sharks use the waters between Cocos Island and the Galápagos Islands as a migratory corridor. Protecting that stretch of ocean helps preserve a biological highway that species depend on across national borders.
The Country That Abolished Its Military
In December 1948, following a brief civil war, Costa Rica’s Congress passed a constitutional amendment abolishing the military entirely. José Figueres Ferrer, the head of the provisional government at the time, disbanded the armed forces, and the funds that had gone to military spending were redirected to education, healthcare, and social programs. Costa Rica has had no standing army for over 75 years.
That decision reshaped the country’s trajectory. Without a military budget draining resources, Costa Rica invested heavily in its people. In 2011, the government mandated that 8% of GDP be reinvested in education, covering everything from preschool through graduate programs. The result is a literacy rate of nearly 98%. For context, 8% of GDP on education is roughly double what many developed nations spend. The choice to fund classrooms instead of barracks made Costa Rica a model that political scientists and development economists still point to when debating how nations should allocate resources.
World-Class Health Outcomes on a Budget
Costa Ricans live to an average age of 81, essentially matching the average across wealthy OECD nations. They achieve this while spending just $1,935 per person on healthcare, compared to the OECD average of nearly $6,000. The country operates a universal healthcare system that covers its entire population, and its focus on primary care and preventive medicine keeps costs low while delivering strong outcomes.
The Nicoya Peninsula in northwestern Costa Rica takes this even further. It’s one of the world’s five “Blue Zones,” regions where people live measurably longer than almost anywhere else. Researchers studying Nicoyan elders have identified several factors behind their longevity: diets rich in tropical fruit and almost no processed food, naturally mineral-rich drinking water high in calcium and magnesium (which supports heart health and bone strength), strong family and community ties, and a cultural concept called “plan de vida,” or “reason to live,” that keeps older adults engaged and purposeful. It’s the Nicoyan equivalent of the Japanese concept of ikigai.
A Renewable Energy Leader
Costa Rica generates about 95% of its electricity from renewable sources. Hydropower provides the backbone, but the country also draws significant energy from wind, solar, and geothermal sources. In most years, the country runs for stretches of months at a time on 100% renewable electricity, something few nations of any size can claim.
The electrical grid is only part of a larger ambition. Costa Rica’s National Decarbonization Plan, submitted to the United Nations, targets a fully decarbonized economy with net-zero emissions by 2050, aligned with keeping global warming below 1.5°C. The plan is broken into three stages: building the foundation through 2022, an inflection period through 2030, and a mass deployment phase through 2050. Early milestones included maintaining the electricity grid above 95% renewable and expanding electric vehicle charging infrastructure. The biggest remaining challenge is transportation, which still relies heavily on fossil fuels, though the country is building out fast-charging networks and incentivizing electric vehicles.
Paying Landowners to Protect Forests
In 1996, Costa Rica passed a forest law that did something unusual: it created a national program to pay private landowners for keeping their forests standing. The Payment for Ecosystem Services program, managed by a government body called FONAFIFO, offers voluntary five-year contracts to landowners who agree to conserve forested land. The program is funded primarily through a tax on fossil fuels.
Applications are scored based on the environmental value of the land. Forests in biological corridors, indigenous territories, protected areas, and watersheds rank highest. Smallholders and landowners in poorer districts also receive priority. Each year, FONAFIFO enrolls as many hectares as its budget allows, selecting from the highest-scoring applications down. The program was one of the first of its kind anywhere in the world and has been widely studied as a template for other countries. Costa Rica’s total forest cover has been increasing since 1990, a reversal from decades of deforestation that few tropical nations have managed. The PES program is one piece of that turnaround, alongside the 1996 ban on clearing mature forests and the broader cultural shift toward conservation.
A Global Conservation Model
What makes Costa Rica genuinely important on the world stage is the combination of all these choices. No single policy tells the whole story. Abolishing the military freed up resources. Investing in education created a skilled, literate population. Universal healthcare delivered long lives at low cost. Paying landowners to protect forests reversed deforestation. Committing to renewable energy made the electrical grid nearly carbon-free. And protecting vast stretches of land and ocean preserved biodiversity that the entire planet depends on.
Costa Rica’s GDP per capita is modest by global standards, roughly a quarter of the United States’ figure. It faces real challenges: rising inequality, fossil fuel dependence in transportation, and the ironic problem that its environmental services program is funded by a fuel tax that shrinks as the country decarbonizes. But for a nation of about 5 million people with limited economic power, Costa Rica has built an outsized reputation by consistently choosing long-term wellbeing over short-term growth. That’s why researchers, policymakers, and environmental organizations treat it as one of the most important case studies in sustainable development.