A little slice of eco-heaven on earth could be yours. So goes the marketing for Forest City, a partially finished new city on the coast of Malaysia’s Johor state. Condo towers covered in plants and connected by public transit, rooftop gardens, a water-recycling system, and a vague commitment to “smart technologies,” all add up, the project’s Chinese developer says, to a “green futuristic city” that will serve as “a prime model” for other towns in our sustainability-focused era. The project boasts several awards for sustainable urban design, including one backed by the U.N.’s environment program.

But the reality is more complicated. Environmentalists say the city that sells itself as a planetary savior is actually a major threat…