Multi-functionality and the provision of eco-system services are politically highly prioritized aspects of farming. In this study the relation between cost of production and the provision of biodiversity for 304 Swedish milk farms is analyzed using a cost function. Biodiversity indicators are based on the number of valuable plant species present at the farm. The results show that the marginal cost of biodiversity increases with higher provision. Further, the marginal cost for both milk and beef production increase with increased provision of biodiversity. The upward slope of the marginal cost of biodiversity and its competitive relationship with market goods question the efficiency of support schemes based on voluntary programs with a flat-rate per hectare compensation.