The Fitzroy Basin is one of the largest catchment areas in Australia covering 143,000 km² and is the largest catchment for the Great Barrier Reef (GBR) lagoon. Recent research has identified that poor water quality is having negative impacts on the GBR. Grazing beef cattle is the dominant land use in the Fitzroy Basin (90% by area) and has been identified as the major contributor of sediment (~%90) and organic nutrient loads to the GBR lagoon. A bioeconomic model has been developed which determines the cost ($/tonne of sediment) incurred by graziers in implementing strategies that increase ground cover and land condition. The results demonstrate the implications of land type, grazing pressure, tree basal area and enterprise operation on optimal grazing pressure for profit and for sediment reduction. The type of enterprise operation and initial start condition have a large impact on the profit made and sediment exported. This allows the tradeoffs between beef production and sediment reduction to be explored and is a useful tool in the design of natural resource management policy and change programs. It was concluded that land initially in poor condition with a reduced grazing pressure provides the cheapest reduction in sediment export if incentive payments are the chosen policy method. However graziers who are utilizing pasture past the optimal rate will require extension actives through education to reduce grazing pressure and sediment run‐off.