Do Protected Areas Affect the Income Levels in Remote Regions? Evidence from Italian Inner Areas

Abstract The economic impact of protected areas (PAs) on local development remains a debated topic in regional economics, particularly in peripheral regions facing demographic and economic decline. While protected areas provide essential ecological benefits, their effects on local economies remain debated, with concerns about land-use restrictions potentially limiting economic opportunities alongside potential gains from tourism and ecosystem services. This study investigates the causal effect of PAs on per capita income in Italian municipalities classified as inner areas under the National Strategy for Inner Areas. We exploit variation in the share of municipal land covered by protected areas using a Difference-in-differences approach with continuous treatment in a dose-response framework. The results show a robust, positive, and statistically significant relationship between PAs and local economic growth. The expansion of protected areas is associated with increased per capita income, suggesting that environmental protection contributes to development in Italy’s marginalized inner regions.