In this study, we explored the potential of the payment-by-results approach in supporting the maintenance of High Nature Value (HNV) grasslands in a typical HNV farming system and Natura 2000 site in Slovenia (Europe) with a high share of small farms, fragmented land ownership and long-term process of land abandonment. We tested the applicability of a hypothetical result-based scheme (RBS) for the conservation of dry grasslands and a set of associated plant indicators, and identified key obstacles to its implementation. Based on a statistical analysis of a survey with 263 farmers and a thematic data analysis of 62 farmer interviews and 10 in-depth interviews and focus groups with researchers, public officials and agricultural advisors, we found that a majority of both farmers and experts support the introduction of RBSs. The selected plant indicators were well-known among the local farmers and monitoring of their presence was preferred over the current system, which demands keeping records on the implementation of farming practices. However, although the RBSs seem to be a superior alternative to the current management-based schemes, their introduction might not be enough to ensure HNV farming systems’ successful conservation. Our results indicate a lack of institutional capacity to implement RBSs on a larger scale, particularly in terms of data support and qualified staff in the advisory service and monitoring agencies. Furthermore, experience to date and mistrust among stakeholders indicate a questionable ability and motivation of authorities to develop locally-based, flexible and innovative agri-environmental measures. RBSs alone also do not adequately address some of the root causes for the disappearance of HNV grasslands, particularly: the lack of knowledge regarding the appropriate modern farming system(s) to ensure their sustainable management in line with conservation goals; specific needs of small farmers; and the need for a socially acceptable land policy reform to enable easier access to land. We argue that systematic investment in closing the existing data and research gaps as well as in increasing the capacity of key institutions at the national and local levels are needed, particularly in European regions of high conservation priority. Furthermore, better integration of nature conservation in different rural policies and a holistic developmental approach in (remote) rural areas are necessary to prevent further abandonment of HNV farming and enable the adoption of biodiversity-friendly farming models.