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Semi-natural grasslands (SNGLs) in Estonia are threatened by abandonment. This threat is leading to concerns about the degradation of biodiversity within grassland communities. Despite the high relevance of economic incentives in this context, how such incentives influence land managers' decision-making regarding the agricultural use of SNGLs has not been investigated. To obtain its socio-ecological implications for policy-making, we developed regionally specific agricultural scenarios (compensation payments, livestock capacity, hey export, and bioenergy production) and an interdisciplinary modelling approach that made it possible to simulate agricultural land use changes through land managers' responses to varied economic conditions. Through this approach, we found that some economic factors hampered the use of SNGLs: the moderate profitability of beef production, labour shortages, and the relatively high profitability of mulching. We observed a positive relationship between SNGLs and habitat suitability for breeding and feeding birds. However, due to the high maintenance costs of SNGLs, the modelling results indicated that increasing the use of SNGLs through public budgets caused crowding-out effects, i.e., the deteriorating market integration of regional agriculture. This study emphasises the need for policy measures aimed at cost-effective, labour-efficient management practices for SNGLs., (© 2024. The Author(s).)