Because of the Malahat:

It was not the riots that did it. Instead it was an adjustment in Vancouver’s score for transport infrastructure, “reflecting recent intermittent closures of the key Malahat highway that resulted in a 0.7 percentage point decline in the city’s overall livability rating,” said the report.
[For out-of-town readers, the Malahat Highway is here at A – on Vancouver Island, about 80 kilometres away, mostly across open water.  A bit like deducting points from Melbourne for traffic problems in Tasmania.]
But actually, the really silly part is this:
The top three cities stacked up equivalent points for the indicators of stability, health care and education, with Vancouver scoring much higher than Melbourne and Vienna for culture and environment …
Culture?  I don’t care how beautiful we are, to even put Vancouver in the same class as Vienna culturally is, um,  more than an 80-km stretch.
UPDATE: Philip Langdon at New Urban Network has an opinion too:

Top Ten surveys, even when they try to be scientific, always have a high degree of arbitrariness. But the residents of Vancouver, British Columbia, have grown accustomed to seeing their city at the top of worldwide rankings of urban livability, and they’re chagrined to see it slip to third place on the latest Livability Ranking produced by the Economist Intelligence Unit.

They have good reason to doubt the ranking’s veracity. 

More here.