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Achieving higher lamb weaning percentages by reducing lamb mortality can improve the profitability of sheep enterprises. In this paper we estimated the financial benefits from providing shelter to reduce the mortality of twin lambs in self-replacing Merino or dual-purpose Merino flock enterprises in south-west Victoria. A whole-farm bio-economic model (MIDAS) was initially used to estimate the increase in profit from reducing mortality of twin lambs and a second analysis included the costs of using perennial grass hedges to provide the shelter during lambing. The economic value of providing shelter was tested at three rates of twinning (10, 30 and 50%), three rates of mortality without shelter (70, 50 and 30%) and two levels of reduction in lamb mortality by providing shelter (25 and 50% reduction). A sensitivity analysis to wool and lamb prices, costs of establishing the grass hedges and stocking rates in the shelter area were also tested. Overall, more than 2500 scenarios were tested. Across the range of twinning rates and levels of twin mortality tested, at standard wool and meat prices, providing shelter to the dual-purpose Merino ewe flock was always profitable ($0.05 to 11.35/ewe) and the profits from providing shelter to the self-replacing Merino ewe flock were generally lower ($0.15 to $6.35/ewe). The impacts of changing wool and lamb prices depended on enterprise type, whereas the costs of establishment of the hedges or stocking rate of ewes in the hedge area during lambing had little impact on profitability. The main factor that determined the economic return from shelter was the reduction in mortality provided by the shelter but the proportion of twin-bearing ewes in the flock and the base rate of lamb mortality without shelter was also important. Overall, based on the assumptions used, we conclude that the profitability of many sheep enterprises lambing during frequent high chill weather conditions in temperate areas of south-eastern Australia could be improved by providing low cost shelter for twin-bearing Merino ewes lambing from July to September.