The economics of happiness has, as of late, emerged as an important academic discipline. More recent studies in the literature have examined the correlates of happiness, with environmental quality being one of them. The present study is the first to test the importance of environmental quality on happiness in a world-wide setting. To do this, panel data methods were used and the analysis was strengthened by classifying countries into different sub-segments. The effect of environmental performance on the higher income countries was found to besignificant and positive, but for developing, lower income countries this relationship loses its significance.