Drawing on empirical evidence from five villages in the upper Mekong catchment in China and Thailand, this study explores the links between resource use patterns, the motives for undertaking collective action, and local institutional capability. Using qualitative case studies, this study examines the ways in which local institutions and community-based conservation actions seek to resolve the dilemma of increased development needs and limited ecosystem capability at the local level. This paper argues that despite limitiations, local institutions have potential in motivating participation of collective action, balancing conflicts between local needs and state's conservation efforts, as well as facilitating the sustainable nature resource management at the local level. The findings of the study are important in the design of national and local policies in natural resource management.