The sheep farmers still grumble, but the return of the wolf to the uplands around St-Martin-Vésubie, a picturesque village in southern France, has proved an unexpected bonanza, according to Gaston Franco, the 65-year-old mayor.

“The wolf has a fearsome reputation,” he said, sitting in the local cafe. “But he has brought lots of euro cash with him. The wolf is a motor for regional development.”

It has not always been like that: the reappearance of wolves in the 1990s put the spectacular southern French Alps at the heart of a bitter row over whether man could live with his age-old enemy, Canis lupus.

“It’s been quite violent,” said Franco, recalling death threats and skinned carcasses of wolves deposited at the entrance to the local national park.

But now generous European subsidies compensate for savaged sheep. It is not always possible to prove a wolf’s involvement in cliff-top stampedes involving hundreds of sheep, and a tendency to give the benefit of the doubt to farmers has encouraged abuses.

“For some farmers it is like hitting the jackpot,” said Franco.

“There was one farmer last year who applied for compensation of €140,000 (about £110,000). I personally saw to it that this was substantially reduced.”

For the village, an estimated 30 wolves prowling in the vicinity has proved a bonanza. Near where the mayor was sitting, an actor from Paris was putting on a wolf costume to perform in a play designed to attract tourists to a theme park called Alpha, the Time of the Wolf.

“We had 60,000 visitors to the park last year,” said Franco, whose idea it was to set up the business. “It is enormously successful.”

Wolves had been extinct in France for more than half a century until 1992, when a pair crossed the border from Italy.

The French government puts an annual €4m (£3.2m) into helping to protect sheep, and the European Union’s Life programme to promote wildlife diversity has invested even more.

The EU is also paying for the Great Pyrenean mountain dogs proliferating in the region. These shambling bundles of white fur, also known as the pastou, are remarkably effective at repulsing wolves.

But if all else fails, farmers are entitled to shoot wolves if their sheep are attacked.

Hugues Fanouillaire, a farmer from near Isola, the ski resort, said the wolves were becoming ever more brazen. “People are getting exasperated. Wolves have started appearing around houses and going through dustbins. They’re not behaving like wild animals any more. They should be killed.”

Laurent Delbos, the director of the Alpha park, hopes the wolf will come to be accepted.

“The wolf has his place here, just as man does,” he said. “I am sure that we can live peacefully together.”

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