How did an extremely less developed, isolated mountain country succeed in keeping its 64 per cent of the area under forest? How did it succeed in avoiding any case of widespread deprivation and keep ecological balance in a fairly sustainable manner? What problems are it facing in its anxiety to keep its cultural core intact and at the same time improve the level of living of its people. This paper deals with the experience of Bhutan, a tiny land locked Himalayan country which has evolved common property and other collective institutions for resource management. Buddhist ethics plays an important role in blending culture with technology. The paper is divided into seven parts. Part I deals with the culture of conservation and Buddhist ethics. Part II includes a discussion on the framework of institutional emergence in mountain societies. Rules and principles have to be distinguished while dealing with boundaries of moral and ethical responsibilities towards environment. Examples of specific institutions for managing water, grazing land, forest and labour contribution for public and common goods are provided in Part III. The institutional innovations are related to technological innovations. Culture of this innovative ethic is reviewed in Part IV. Specific examples based on water stream driven prayer wheel, architecture and education, alignment of irrigation channel, movement of livestock, prevention of diffusion of animal diseases, generation of cropping system and management of shifting cultivation are covered in this part. Part V includes issues that are emerging in the process of technological transfer given the above context. What are the major risks and how are they perceived by the people is discussed in Part VI. The role played by collective institutions, moral responsibilities and non-monetised reciprocities is particularly highlighted. The policy implication for sustainable development of mountains are listed in Part VII. We believe that bureaucratic or market institutions have failed to conserve natural resources anywhere in the world. The Western conception of resource conservation through complete closure are neither scientifically or socio-ecologically sustainable. The principles of maintaining socio-ecological diversity and complexity through innovative institutions are available in the frame of individuals and groups have to be developed in the changing technological and politico-economic environment. Bhutan's experience can be helpful even for the developed countries.