How can development build on the assets in the mountain environment without inviting degradation? The problems of analysis and design of mountain development are not questions of technical production but of institutional issues of distribution and equal access to resources. Most studies have emphasized "strategies" - how to plant trees and attract capital - to the exclusion of "institutions" - how to meet forest needs of the poor and sustain development efforts - as variables affecting mountain development. New projects have not been able to change behavioural patterns and the schemes remain isolated eco-engineering activities. Environmental development requires a societal framework that includes legal, administrative, and economic components. The specific goals involve questions of values and conflicts of interests, and they need public participation for them to be sustainable. This paper provides a framework for policy-focused reform and a new perspective on the problems and possible solutions.