Despite their importance for biodiversity and other ecosystem services, many semi-natural grasslands deteriorate or have even disappeared due to insufficient grazing and neglect. Preservation of grassland habitats depends on a good understanding of sustainable grazing management as well as effective agricultural policy measures that ensure long-term economic sustainability for the farmer. Through meta-evaluation and synthesis of previous investigations and discussion of scientific literature, we aimed to evaluate factors that determine the extent to which cattle and sheep in Sweden graze semi-natural grasslands instead of more productive land and what this means for biodiversity and sustainability. We also aimed to propose which practises and policy measures may be the most cost-effective to promote habitat quality and the sustainable use of grasslands. Results from a nationwide survey of Swedish farmers’ attitudes towards agri-environmental payment schemes are discussed in relation to farm characteristics and other factors influencing the use of cattle and sheep for sustainable grazing. This study supports recommendations by environmental economists that payments should be targeted more strongly at the most valuable grasslands, emphasising the need for a more detailed and nuanced framework for classifying grasslands in Europe. A comparison with independent estimates of the area of agricultural land from nation-wide, sample-based monitoring shows that the data from official statistics normally used for nationwide evaluations are partly biased and of insufficient quality, underscoring the need for more sophisticated and precise methods for monitoring both overall trends and detailed environmental effects related to the preservation of semi-natural grasslands.