This study was conducted in the Banni region of the Gujarat State, India, which is located in the weste-most end of the country. The main objective was to investigate the local perceptions of grassland change, regeneration potentiality, socio-economic status and fac-tors that cause degradation of the vegetation resources in Banni. Participatory Rural Appraisal (PRA) was employed to generate the socio-economic profile of interviewed villages or hamlets. Information on vegetation deteriora-tion and changes in species composition significant for sustainable management of grassland was obtained through interviews with 51 elderly maldharies (pastoral-ists) and local inhabitants living in 31 villages in Banni. Local people had observed a change in the local surrounding habitats from grassland to woodland (domi-nated by Prosopis juliflora, locally called Gando Bavar) during their lifetime and considered it primarily a result of frequent intensive drought, constructed dams on flooding rivers in Banni, and declining rainfall. The socio-economic survey showed that the Banni communities are highly dependent on the natural grassland for various purposes. In particular, nine woody species were useful for construction of the traditional house called Bhunga, four for medicine and 22 for livestock fodder. Highly preferred and declining species were characteristically large wild thoy trees with edible fruits, viz. Acacia nilotica subsp, indica (Bavar), Prosopis cineraria (Kandho), and Salvadora persica (Kharijar). Some of the locally highly preferred grass species were also considered to be declining in the local environs; they included Dichanthium annulatum (Jinjvo), Cenchrus ciliaris (Dbaman), Sporobolus fertilis (Khevai) and Chloris barbata (Siyarpuchha). The study furthermore identified a close coincidence between the interest in conserving tree species diversity nearby the natural water resources and priorities of local inhabitants, which included protection of plenty of large trees (including many fruit tress, viz. Mangifera indicia (Ambo), Cordia dichotoma (Gunda)and Pithecellobium dulce (Gora-samli)), improvement of woody fodder tree and grass species regeneration, and reduction of overgrazing pres-sure on grasslands. Focusing management strategies on increasing the populations of such declining and highly preferred tree and grass species, by active restoration and grazing policies, would enhance the natural resource value and biodiversity wealth considerably and thereby the quality of life for the local inhabitants. The implications of the results are discussed and recommendations are suggested for conservation, management, and sustainable utilization of the fragile grassland ecosystem of the Banni region.