Peatlands are unique ecosystems that support a wide range of very different ecological functions and processes that provide essential ecosystem goods and services. Many peatlands worldwide have been directly used by human for centuries, causing severe deterioration and losses of ecosystem services. The degradation of peatlands and related negative environmental impacts can be reduced or halted by rewetting and other restoration management practices. However, these restoration practices are in conflict with current land-use patterns, leading to a dilemma that can only be resolved through multidisciplinary understanding of peatland ecosystems and the impacts of land-use management. This thesis aims to understand the environmental impacts of different land-use practices on peatlands. Three parts of this thesis looked at intensive agricultural production, nature restoration and sustainable land use options on peatlands. In conclusion, it is hard to mitigate GHG emissions on drained peatlands, while nature restoration can provide biodiversity and climate co-benefits. Alternative land uses such as paludiculture is currently economically not compatible with the conventional drainage-based dairy farming, but have the potential to deliver substantial ecosystem services, which could be capitalized via carbon credit or payment for ecosystem services.