Majority of Dutch peatlands are drained and used intensively as grasslands for dairy farming. This delivers high productivity but causes severe damage to ecosystem services supply. Peatland rewetting is the best way to reverse the damage, but high water levels do not fit with intensive dairy production. Paludiculture, defined as crop production under wet conditions, provides viable land use alternatives. However, performance of paludiculture is rarely compared to drainage-based agriculture. Here, we compared the performances of six land use options on peatland following a gradient of low, medium, and high water levels, including conventional and organic drainage-based dairy farming, low-input grasslands for grazing and mowing, and high-input paludiculture with reed and Sphagnum cultivation. For each land use option, we conducted environmental system analysis on model farm system defined by a literature based inventory analysis. The analysis used five ecosystem services as indicators of environmental impacts with a functional unit of 1-ha peat soil. Ecosystem services included biomass provisioning, climate, water, and nutrient regulation, and maintenance of habitat. Results showed that drainage-based dairy farming systems support high provisioning services but low regulation and maintenance services. Organic farming provides higher climate and nutrient regulation services than its conventional counterpart, but limited overall improvement due to the persistent drainage. Low-intensity grassland and paludiculture systems have high regulation and maintenance services value, but do not supply biomass provisioning comparable to the drainage-based systems. Without capitalizing the co-benefits of regulation and maintenance services, and accounting for the societal costs from ecosystem disservices including greenhouse gas emission and nitrogen pollution, it is not likely that the farmers will be incentivized to change the current farming system towards the wetter alternatives. Sustainable use of peatlands urges fundamental changes in land and water management along with the financial and policy support required.
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