On making geographic specificity a driver for territorial development in Europe. As part of the ESPON project Geospecs delving deeper into the issue of geographic specificities and development potentials in Europe, this Working Paper presents analytical material and conclusions aiming at feeding the policy debate on local development challenges and opportunities in Europe's sparsely populated areas. After characterizing Sparsely Populated Areas in Europe in terms of demographic and socio-economic structures and trends, the authors propose a discussion that aims at inspiring the elaboration and implementation of local and regional development strategies in these territories. As a basis for dialogue, the authors developed a specific Nexus Model for Sparsely Populated Areas that illustrate how the spatial effects of sparsity impact 'soft' and 'hard' development factor in those areas leading to the identification of specific challenges and opportunities. An important conclusion of the report is that regional policies should more proactively promote the more efficient use of these areas' assets to grasp new development opportunities, for instance via reinforced Territorial Cooperation and expanded Business Networks, instead of excessively focusing on 'overcoming' their permanent locational disadvantage through 'hard' infrastructure.