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Despite a growing body of research about rangeland degradation and the effects of policies implemented to address it on the Tibetan Plateau, little in-depth research has been conducted on how pastoralists make decisions. Based on qualitative research in Gouli Township, Qinghai province, China, we analyze the context in which Tibetan herders make decisions, and their decisions about livestock and pastures. We refute three fundamental assumptions upon which current policy is premised: that pastoralists aim to increase livestock numbers without limit; that, blindly following tradition, they do not actively manage livestock and rangelands; and that they lack environmental knowledge. We demonstrate that pastoralists carefully assess limits to livestock holdings based on land and labor availability; that they increasingly manage their livestock and rangelands through contracting; and that herding knowledge is a form of embodied practical skill. We further discuss points of convergence and contradiction between herders' observations and results of a vegetation analysis. [ABSTRACT FROM AUTHOR]