Yes, I perfectly agree with your second solution to urbanisation. Humans naturally migrate from a less comfort zone to a better comfort zone. If life is made comfortable in the rural communities by the provision of social amenities, security and good business environment, the massive rural to urban drift will be greatly reduced. And that is a sustainable solution to deforestation caused by urbanisation.
Many of the urban cities don't even have any single forest at all. In some cities, all the forests have been cleared and even water bodies and swaps are reclaimed for building. And at that, the various companies are still releasing their effluents into the atmosphere.
While urbanisation is good, we should also be mindful of the environmental problems associated with it and put measures to curb them.
Thanks for sharing this important topic.