In Indonesia, with the recent eruption of local struggles over resources and now with the new decentralization reforms, there is renewed interest in the role of customary adat institutional arrangements in village government, land tenure, and forest management. On the basis of research carried out in one locality in Sumatra over 1996-99, this article considers the nature of local institutional arrangements, how they have evolved under various conditions, their complex interaction with the parallel State order, their response to economic fluctuations, and how particular institutional patterns lead to certain environmental outcomes. This article finds that as farmers adjust to the economic and political dynamics and the changing scarcity and value of different resources in this site, the adat arrangements are constantly renegotiated. Adat customary orders are tied to local notions of identity and associated notions of appropriateness, and as such constitute patterns of social ordering associated with both implicit deeply held social norms and more explicit rules. Considering the institutional pluralism characteristic of this area, this article concludes that, while the State and adat regimes often compete to control the direction of social change, they also constantly make accommodations, and in some respects need to be considered as mutually adjusting, intertwined orders.