Kyrgyzstan’s grasslands have an economic importance as well as crucial ecological meanings. The hypothesis to be explored here is that formal institutions, especially top-down-initiated legal rules implemented since 1991, are decisively contributing to the formation of socio-ecological pasture-related challenges. It is misleading to explain these problems through the neo-Malthusian argument that a growing population necessarily leads to overexploitation and degradation of natural resources. The causes are much more complex. Utilization practices applied by the actors can be understood as results of the interplay of economic necessities, weak legal institutions, legal uncertainty and a related lack of reliable planning opportunities. In this way, inappropriate and unstable legal arrangements are stimulating the processes of socioeconomic stratification and disintegration of the society as well as those of pasture degradation. Based on findings obtained during field studies in Kyrgyzstan’s south-western walnut-fruit forest region, this paper advocates for the principles of an integrated sustainable development of Kyrgyzstan’s agricultural sector. Management responsibilities, access and utilization rights need to be matched to the specifics of local contexts and legitimized through participatory approaches. Including the local population in the institution-building process can make a decisive contribution to social development by balancing different interests.