Protected areas are one of the major tools used to conserve biodiversity, but theireffectiveness is regularly questioned. One key concern is that municipalities mightrefrain from enrolling land into protected areas because it might be detrimental toeconomic activity. As a consequence, protected areas may be located in places whereeconomic activity is low rather than where biodiversity is most threatened. We studythe allocation of protected areas in France using a rich set of data on biodiversity,economic activity, tax potential of municipalities and socio-demographics. We firstshow that biodiversity is highly positively associated with protection, even condi-tional on economic activity, thereby softening the concerns that protected areas areunrelated to conservation objectives. We also uncover a major gap in tax potentialbetween protected and unprotected areas conditional on biodiversity. We show thatmost of this gap is explained by variables measuring the intensity of economic activ-ity. Finally, we find that socio-demographic and political variables do not explain theremaining gap. There are two possible explanations for our results: either protectionkills economic activity, or areas are protected only where economic activity is notdeveloped