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The lack of realistic estimates of the costs of protected area establishment and effective management can hinder conservation planning and result in under-funded 34;paper parks 34; that fail to meet conservation goals. This study comprises the first comprehensive and systematic estimate of the costs of conserving a globally recognised biodiversity hotspot, the Cape Floristic Region. To our knowledge, it is also the first study to use specific relationships between protected area attributes and management costs to estimate the long-term costs of implementing a regional conservation plan. We derived a configuration for an expanded protected area system and two off-reserve mechanisms (contractual reserves and other incentive mechanisms) that achieve explicit conservation targets for biodiversity pattern and process identified in a systematic conservation planning process. Using a costing model, we then estimated the costs of establishing and maintaining this reserve system. Although the reserve system is one of many potential configurations that may achieve the designated conservation targets, the results indicate that the costs of conservation are substantial. An expenditure of $45.6 million per year, assuming a 20-year implementation horizon, is required to develop a representative reserve system, while the annual costs of maintaining this system are $24.4 million. Owing to the economies of scale, especially the marked increase in unit management costs when protected area size 60;600 ha, the predicted cost of managing the expanded system was only 1.2 times that of the existing system. Overall, the level of expenditure required to effectively conserve the region 039;s biodiversity is low relative to its regional and global significance.