Bat-borne pathogens such as Nipah virus, SARS-CoV2, and Ebola have been causing significant losses to the global economy and human lives. In this paper, the role of afforestation and agroforestry in mitigating risk of bat-borne disease transmission to humans is explored using an epidemiological-agroforestry model of land use decision on private farms. Farmers owning land in fragmented forest areas are financially incentivized to grow Gmelina arborea-based forests or intermix them with agricultural crops. This reduces forest fragmentation through creating connectivity between forest patches. While agroforestry may increase the chances of contact between bats and humans, a reduction in forest fragmentation improves the carrying capacity of bats and reduces their risk of migration and roosting near human dwellings. Results indicate that afforestation on private lands or promoting agroforestry can help reduce the risk of virus transmission to humans. A small sum paid under a payment for ecosystem services (PES) scheme would be sufficient to incentivize farmers to convert their farmlands into Gmelina arborea-based agroforestry or forests. In absence of substantial PES incentives, private landowners may delay land conversion when financial benefits generated through agroforestry timber sales carry higher weight in their optimization decisions. Whereas the socially optimal land use option would be to immediately convert farmland in affected areas to agroforestry or forests. Therefore, from a policy perspective, promoting PES-based forestry and agroforestry in fragmented bat habitats can help prevent spread of deadly viruses in the future. © 2021 Elsevier Ltd