According to a report by the Organisation for Economic Co-operation (OECD), the group of the world's advanced economies, Germany ranked only below Sweden and Iceland for environmental quality.
In Germany, 95 percent of people said they were satisfied with their water quality, which was one of the highest rates in the OECD, which had an overall average of 81 percent satisfaction across all countries.
Germany also had lower levels of air pollution compared to other advanced nations. Levels of PM10 in German urban areas are 15.6 micrograms per cubic meter, which is lower than the OECD average of 20.1 micrograms per cubic meter.
This also means Germany meets World Health Organization guidelines, which set the annual limit at 20 micrograms per cubic meter.
"The quality of our local living environment has a direct impact on our health and well-being. Outdoor air pollution is one important environmental issue that directly affects the quality of people's lives," the report said.
The environmental quality finding was part of a larger 'Better Life Index' aimed at better reflecting the overall well-being of people living in each country.
But when it came to political influences on quality of life Germany performed much worse.
The index showed that of the 11 categories, Germany performed the worst in civic engagement, which assessed how much citizens are involved in democracy based on factors like voter turnout and government transparency.
Germany ranked 27th place out of 36 countries for civic participation, worse than Greece and France and ahead of the Czech Republic. The country scoring the lowest was Chile while Australia topped the list.
Voter turnout in 2013 was about 72 percent, which was higher than the OECD average of 68 percent, but Germany fell behind in the openness of its government.
Germany placed 30th out of 36 for the level of government transparency when drafting legislation.
The country also showed a big gap of inequality when it comes to who is voting. The richest 20 percent had a voter turnout of 81 percent while the poorest 20 percent had a turnout of 59 percent.
"This 22 percentage point difference is larger than the OECD average difference of 13 percentage points, and points to shortcomings in the political mobilisation of the worst-off," the report said.
Germans did rate their overall satisfaction higher than other countries at 7.0 on a scale of one to ten, compared to the OECD average of 6.6.
Denmark led the way in overall life satisfaction, followed by Iceland, Switzerland, Norway and Israel.