Highland grasslands present a familiar landscape to anyone keen on mountain areas. These ecosystems are aesthetically pleasing, support many endemic species and are important grazing lands for both native animals and stock. These communities have long been of keen interest to ecologists, most commonly because of their unique flora and fauna. What is perhaps less widely recognised is that these systems are important contributors to our economic prosperity because of their role in capturing, storing, filtering and releasing vast quantities of water. This role in the hydrological cycle is strongly dependent upon the peaty nature of the soil underlying highland grasslands. These peaty soils are threatened by climate change and land management practices, endangering these ecosystems themselves but also having enormous ramifications for ecosystems, settlements and industries downstream and downhill. In this talk I will present observational and experimental research from Tasmania over the past decade that seeks to understand the interplay between climate, plants and ecosystem-level processes crucial to the maintenance of these ecosystems as well as to predict the future of both them and the services they provide. I will also highlight the contribution of the recently established Australian Mountain Research Facility to our understanding and ability to predict the future of highland ecosystems.