The country performed well across all of the sub-indices, especially in the natural environment sub-index, where it placed first, the institute said.

In its annual index, Legatum for the first time included governments' efforts to reduce pollution, preserve biodiversity and limit the exploitation of natural resources.

Slovenia's ranking is the result of the "aggressive" environmental policy Slovenia has adopted over the past decade, which includes the creation of large protected areas on land and sea.

According to Harriet Maltby from the institute, the creation of natural parks has increased health and happiness and helped improve the tourism industry, which boosted the country's overall wealth.

"Slovenia is a country with a high diversity of natural environment gathered in a small area," the Slovenian Environment Ministry said in a statement for the Thompson Reuters Foundation.

Slovenia also made a leap in the economic quality sub-index, where it placed 30th, up 28 from last year.

The Legatum Institute's index measures the prosperity of 149 countries based on various factors, including their wealth, education, personal freedom, safety and security, and how they get on with their neighbours.

Placing right ahead of Slovenia were Singapore, France and the US, while the country was followed by Spain, Japan and Hong Kong. New Zealand topped the list, followed by Norway and Finland.