Lower temperatures and good rainfall spurred by La Nina have helped the environment strongly recover, according to the 2021 Australia's Environment Report.
Conditions improved in all states and territories, with the most pronounced recoveries in Western Australia and Tasmania.
Overall, Australia's environment score was 6.9 out of 10, more than double that of 2020 when the country's environment was given a three out of 10 following the Black Summer bushfires of 2019 and 2020.
"Above average rainfall and lower temperatures not seen for eight years have contributed," hydrologist Albert van Dijk said on Thursday.
Also contributing has been low fire activity, eased drought conditions and good rainfall that has replenished parched soils, improved vegetation and led to better growing conditions.
Despite the recovery, the nation's biodiversity - or variety of life - continued to suffer.
Twelve Australian species were declared extinct in 2021 and 34 more were added to the threatened species list, according to the Australian government.
"The two most recent extinctions were a little bat and a skink last seen on Christmas Island in 2009 and 2010," ecologist Shoshana Rapley said.
"It is a wake-up call that threatened species conservation needs to be taken more seriously."
According to the report, Australia's carbon emissions decreased by almost two per cent, primarily because of the COVID-19 pandemic.
"Australia contributed 1.4 per cent to global emissions in 2021, compared to 1.5 per cent in 2020," Prof van Dijk said.
The nation's per-capita emissions remain among the highest globally due to high individual energy use, the continued use of polluting coal, and large non-carbon dioxide emissions.
Researchers also found 2021 was the sixth warmest year on record, with some areas of inland Australia reporting record high July temperatures.
"But the number of days exceeding 35C was the lowest since 2011, so it was generally less hot last year," Prof van Dijk said.
Sixteen new species were discovered in 2021, including spiders, frogs and an octopus.
Ms Rapley said that does not mean biodiversity was improving as the species were already present.
Prof van Dijk warned that climate change impacts like heat waves, drought and bushfires would continue to degrade the environment and ecosystems for decades to come.
"Decisive action to actively reduce global carbon emissions and improve ecosystem management can avoid these impacts from becoming worse than they have to be," he said.
"Both are entirely within our reach, but only if the necessary action is taken."
The annual report is prepared by researchers at The Australian National University.
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