For some environmental assets in rural areas, the landholders who are having the biggest impact are people with small holdings and an emphasis on lifestyle rather than commercial gains from their land. This paper aims to better understand the motivations and likely responses to policy for lifestyle landholders in Australia, in order to assess which policy mechanisms, if any, are likely to be most efficiently used to influence their land management. Through face-to-face interviews, we find that lifestyle landholders have important differences from commercial farmers, including much smaller properties, a stronger interest in environmental outcomes, a lack of land-management skills and a lack of time for land-management activities. From the perspective of environmental policy programs, engaging with lifestyle landholders is likely to involve higher transaction costs, and there are likely to be higher learning and transition costs per unit area. A framework for selection of policy tools is modified to take account of these findings. It is concluded that the prospects for worthwhile public investments in land-use changes by lifestyle landholders are lower than for commercial landholders.