Alternative grazing systems and pasture types for wool production in the south west of Western Australia were analysed using bio-economic modelling techniques in order to determine their relative productivity and profitability. After reviewing the experimental and modelling literature on perennial pastures and grazing systems, seven case studies of farmers were conducted in order to investigate the practical application of innovative grazing systems and use of perennial pastures. Together these case studies provided information for identifying relevant variables and for calibrating the modelling work which followed. The core of the work lies in a bio-economic model for investigating the comparative value of the three grazing systems and two pasture families mentioned above. A baseline scenario using currently available and reliable scientific data provides baseline results, after which a number of sensitivity analyses provide further insights using variations of four key parameters: persistence, heterogeneity, water soluble carbohydrates, and increased losses. Results show that perennial pastures are in the studied region more profitable than annual pastures. Under current baseline conditions, continuous grazing with perennial pastures is the most profitable enterprise, but this superiority is not robust under parameter variations defined by other scenarios. The more robust solution in terms of enterprise profitability is cell grazing with perennial pastures. The results indicate that intensive grazing systems such as cell grazing have the potential to substantially increase the profitability of grazing operations on perennial pasture. This result is an encouraging one in light of its implications for water uptake and salinity control. It means that economics and land care can go hand in hand, rather than be competitive. It is to be noted that it is the choice of the grazing system in combination with the pasture species, rather then the pasture species itself, that allows for such complementarity between economics and sustainable land use. This research shows that if farmers adopt practices such as cell grazing they may be able to increase the area that they can profitably plant to perennial pasture thus reducing the impacts of dryland salinity. This finding is consistent with the findings of the case studies where the farmers perceived that, provided grazing was planned, increasing the intensity of their grazing management and the perenniallity of their pastures would result in an increase in the profitability of their grazing operation. As a result this research helps to bridge a gap which has existed in this area of research, between the results of scientific research and those reported in practice.