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The need to implement sustainable resource management regimes for semi-arid and arid rangelands is acute as non-adapted grazing strategies lead to irreversible environmental problems such as desertification and associated loss of economic support to society. In these sensitive ecosystems, traditional sectoral, disciplinary approaches will not work to attain sustainability: achieving a collective vision of how to attain sustainability requires interactive efforts among disciplines in a more integrated approach. Therefore, we developed an integrated ecological-economic approach that consists of an ecological and an economic module and combines relevant processes on either level. Parameters for both modules are adjusted for an arid dwarf shrub savannah in southern Namibia. The economic module is used to analyse decisions of different virtual farmer types on annual stocking rates depending on their knowledge how the ecosystem works and climatic conditions. We used a dynamic linear optimisation model to simulate farm economics and livestock dynamics. The ecological module is used to simulate the impact of the farmers' land-use decision, derived by the economic module, on ecosystem dynamics and resulting carrying capacity of the system for livestock. Vegetation dynamics, based on the concept of State-and-transition models, and forage productivity for both modules is derived by a small-scale and spatially explicit vegetation model. This mechanistic approach guarantees that data collected and processes estimated at smaller scales are included in our application. Simulation results of the ecological module were successfully compared to simulation results of the optimisation model for a time series of 30 years. We revealed that sustainable management of semi-arid and arid rangelands relies strongly on rangeland managers' understanding of ecological processes. Furthermore, our simulation results demonstrate that the projected lower annual rainfall due to climate change adds an additional layer of risk to these ecosystems that are already prone to land degradation.