There is a growing literature analyzing the effects of globalization on the environment. Yet, we know little about how economic openness affects biodiversity. In this paper, we focus on the conflicting incentives that foreign direct investment (FDI) poses on governments’ foremost strategy to protect biodiversity: the establishment of protected areas. Protected areas remove land – and its resources – from private appropriation and exploitation. Although protected areas have expanded in most countries, especially since the mid-1980s, they have done so at varying rates, which is not explained merely by geography or development. We test three competing hypotheses regarding the relationship between FDI stock and protected areas: the Race to the bottom hypothesis (FDI discourages the expansion a country’s protected areas); the California effect hypothesis (FDI is associated with a more progressive expansion of a country’s protected areas); and a variant of the Kuznets curve hypothesis (FDI has a U-shaped effect on the expansion of protected areas). Panel data analyses on a diverse sample of 60 developed and developing countries strongly support the California effect, though FDI’s positive effect is diminishing. Such finding is robust to different samples, different measures of FDI, and estimation methods. Our paper sheds new lights on globalization’s non-economic implications and adds to our understanding about how international factors influence the provision of public goods.