The majority of Dutch peatlands are drained and used intensively as grasslands for dairy farming. This delivers high productivity but causes severe damage to the provisioning of ecosystem services. 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, but these alternatives are rarely compared to conventional drainage-based systems. Here, we compare ecosystem services of six theoretical production systems on peatland following a gradient of low, medium, and high water levels. This includes conventional and organic drainage-based dairy farming, low-input grasslands for grazing and mowing, and high-input paludiculture systems with reed and Sphagnum cultivation. For each production system, a theoretical 1 ha unit was designed using data from literature. Four aspects of ecosystem services were quantified and monetized, including agricultural productivity, reduction of greenhouse gas emissions, water storage, and biodiversity potential. Results show that drainage-based dairy farming systems only support high milk production without any of the other ecosystem services included, even with organic farming practices. Biomass producing paludiculture systems have high ecosystem services value, but do not lead to production values comparable to the present dairy farming. Capitalizing GHG reduction and other ecosystem services from peatland rewetting with carbon credits or other payment schemes would close this production and income gap. However, standard practice to monetize provision of ecosystem service is currently unavailable. Sustainable use of peatlands urges more fundamental changes in land and water management along with the financial and policy support required.