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The paper assesses the impact of different policy options on the land use and associated biodiversity values of jointly organised low-intensity grazing systems (‘Allmende’) in Bavaria. We use an integrated economic and ecological modelling approach to compare three scenarios with the situation in 2003/05. We base the economic sub-model on single farms, which alter their land use in response to economic stimuli. Within the economic part, factors like the farm's endowment with machinery and quota are regarded. Within the rule-based ecological sub-model we analyse: area of protected habitats according to the EC Habitats Directive; biodiversity for selected taxonomic groups and habitat quality for different target species. An overall evaluation of the scenarios indicates that decoupling has a limited effect, because higher direct payments compensate the effect of lower product prices. If all payments are strictly targeted to agri-environmental measures and set to a level which guarantees a low-input management of the grassland, the public costs could be reduced and additional habitats for the target species could be provided. Regarding all indicators but the extent of protected habitats and the public costs, a scenario with a cessation of public payments and market liberalisation performs the worst. [Copyright &y& Elsevier]