Brazil ranks 34th in the green index, ahead of the United States.

From the window of a Boeing, few countries are greener than Brazil. Since much of this vast territory in the heart of South America is still unpeopled and unblemished, it's not surprising that Brazil looks good against the backdrop of a mistreated planet. It ranks 34th of 149 nations in Yale and Columbia's Environmental Performance Index—greener than Ireland (35th) and the United States (39th). But how long will the country be able to hold on to this favorable score?

To get a better look, you have to go to 9,000 meters, the altitude from which the NASA remote-sensing satellites sweep the earth. Every year, scientists at Brazil's National Institute for Space Research (INPE) pore over satellite images to produce the most detailed survey of deforestation of any nation in the world. Such candor has won Brazil kudos, but also criticism. Brazil is the fourth biggest contributor of greenhouse gases globally, of which 75 percent comes from the felling and burning of forests. So when data released by INPE in late May showed that 5,850 square kilometers of forest (an area larger than Brunei) had disappeared from August 2007 to April 2008—a 17 percent spike from the year before—the planet took notice. "Brazil has a fantastic endowment from nature but is failing when it comes to managing it," says Judicael Clevelário Junior, head of environmental studies at the Brazilian Institute of Geography and Statistics (IBGE), the census bureau.

Brazil's green laurels are not an illusion. Four fifths of its electric power comes from hydroelectric plants. It is the world leader in biofuels—nearly 30 percent of its cars run on ethanol. The trouble is that these virtues reflect sound decisions made in the 1970s, during the ambitious military government of Gen. Ernesto Geisel. Brazil has not always followed them up.

Major cities are marred by open sewers and choking on smog; despite the renewed interest in ethanol, nearly 70 percent of the country's cars and trucks still burn gasoline or diesel. With a score of 60, Brazil is one of the hemisphere's worst offenders on the EPI for levels of low-lying ozone, a byproduct of burning fossil fuels and a cause of respiratory illness. Only 46 percent of Brazilian homes have running water or sewage mains, according to the IBGE. The hospitalization rate for illnesses due to tainted water (diarrhea, hepatitis) is five to 10 times higher in the impoverished, rural north and northeast than in the affluent south, according to the census. For decades, national leaders have been building highways through the Amazon, paving the way for settlers, loggers and land grabbers. "These are not the marks of sustainable development," says Clevelário.

Brazil will have to find some creative ways to discipline its frontier, where the population has risen fourfold, to 25 million people, since 1960. That is not impossible. The nation still has 77 million hectares of idle arable land outside the rain forest. (Distillers say they can easily double ethanol output without toppling a single hectare of rain forest.) And there are nearly 40 million more hectares of degraded pastureland in the Amazon itself that could be wooed back into production.

Fortunately, Brazil has options. Its booming economy is not beholden to coal-fired power plants, and the rain forest is still largely intact. "Brazil has a rare opportunity to transform itself into a rich country and still maintain its natural capital," says Clevelário. If it can go back to its old habit of making the right environmental moves.