The following paper assesses the impact of different policy options on the land use and associated biodiversity values of jointly organized low intensity grazing systems (‘Allmende’) in Southern Bavaria. We use an integrated economic and ecological modelling approach to compare the results of the scenarios with a reference situation that reflects the Common Agricultural Policy prior to the Fischler Reform. The economic sub model is based on single farms which alter their land use in response to economic stimuli. Within the economic part, key factors like the farm’s endowment with machinery, quota and buildings but also the farmer’s attitude are regarded. Within the rule based ecological sub model we analyze three main parameters: (a) protected habitats according to the EC Habitats Directive, (b) biodiversity for selected taxonomic groups (plants, lichens, ground beetles) and (c) habitat quality of selected target species (plants, butterflies). An overall evaluation of the scenarios leads to the conclusion that the impact of the Fischler reform will be fairly limited in the study area, since at the observed level of intensity the lower product prices will be compensated by higher direct payments. If all payments were strictly targeted to agri-environmental measures and set to a level which guarantees a low input management of the grass land, the overall public expenses could be reduced by approx. 100 to 200 € ha-1. In addition this setting will provide additional habitats for the target species. However, the number of agricultural employment opportunities and the agricultural value added decline severely. Regarding all indicators but the extent of protected habitats and the public costs, a scenario of complete market liberalization performs the worst.