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Abstract: Raising surface water levels in peat areas is a measure to reduce soil subsidence, to prevent decay of wooden foundations and to stimulate wet nature restoration and reduce greenhouse gas emissions. However, in these areas dairy farms are present and farming at wetter soils is difficult due to lower bearing capacity of the soil for cattle and machines. Water boards are responsible for the water management of peat areas and thus have to evaluate the effects of water management strategies for the different land use functions. Therefore the hydrological, agronomical and economic effects of different surface water levels are calculated for dairy farms. The ‘Waterpas’ model is used to simulate hydrological effects, dairy farm management and economic results for different meteorological years. The raised surface water level causes a decrease in gross grass yield and a reduction in grass quality. This leads to higher costs and less farmers’ income relative to a reference situation with a freeboard of 60cm. Raising the surface water increases the average costs for farmers with €89ha−1 year−1 for a freeboard of 50cm, €170ha−1 year−1 for a freeboard of 40cm and €239ha−1 year−1 for a freeboard of 30cm. However, water boards are not only interested in the effects for individual farms, but also for an entire region. A new spatial method was developed for upscaling from farm to polder level. For grassland fields in a typical Dutch peat area classes can be distinguished using GIS data on soil type, soil surface elevation, surface water levels, locations of farms and farm characteristics. The classification is based on 4 classes of freeboards of the grassland fields and 7 typical distributions of grassland fields within a dairy farm. The farm economics were simulated for these typical classes. An increase in costs was simulated for the whole polder Zegveld (1400ha grassland) of €119,000year−1 at 10cm surface water level rise; €133,000year−1 at 20cm surface water level rise and €185,000year−1 at 30cm surface water level rise. For an integral environmental evaluation of changing hydrological conditions it is advised to incorporate effects on nutrient emission to groundwater and surface water and emission of ammonia and greenhouse gases to the atmosphere. [Copyright &y& Elsevier]