China is about to embark on a new round of grassland policies as part of its 14th Five-Year-Plan. Although current grassland policies have generally been perceived positively in arresting widespread grassland degradation, concerns have arisen that the current policies may not be effective in achieving the desired reduction in livestock numbers. Furthermore, there are concerns the incentive-based payments that are part of these policy programs may not reflect herder opportunity costs or the marginal environmental benefits of the program, with associated issues of herder satisfaction and compliance. Changes to current policy settings are being considered in response to these concerns. This paper reports on an interdisciplinary and ex-ante analysis of alternative policy settings affecting grazing and livestock management in terms of their environmental impacts, net social benefits and other impacts. The analysis finds that a bundle of instruments involving both positive and negative herder incentives is needed if desired stocking rates are to be achieved. The impact on herder incomes, both positive and negative depending on the grassland biome, along with transaction costs of implementing the policies, have the most influence on net social benefits.