This case study discusses the role of local institutions, and how they could affect the decision making of households on private labour investments for soil and water conservation in the highlands of Tigray, Ethiopia, where soil degradation problem is a major threat to the agricultural sector and household food security. Soil and water conservation practices have been taken place widely either privately or by the public. Local institutions play greater role in mobilising resource, mainly labour, from their members and invest it on SWC practices as well as on other activities. Farmers invest labour in soil and water conservation on own land privately and contribute labour to the institutions. They also are entitled to receive labour from the institutions. The institutions are found to influence private SWC investment decision in three major ways; through their investment on privately owned land, labour contribution from the household, and through their income effect. Other than institutional factors, factors like, level of erosion problem, resource endowment, and sex of the household head are found to affect level of private investment. Because of the level of degradation problem or due to unperceived soil erosion problems some households invest privately less, while the initial investment from the institutions encourages private SWC investment. Public investment in SWC includes the investments both on privately owned land and open land that are practised either through labour mobilised from the community or food-for-work. The level of private investment and land character (slope) mainly determines the level of community investment on private land, while labour contribution to the institutions is affected by the number of households enrolled in the institutions, food-for-work, number of female members in the household, and area. Thus the consideration of local institutions would be important in formulating policies for improved land management.