What should policy makers do in deciding between institutions promoting community livelihoods or sustaining wetland resources within an impoverished community? Prioritizing community livelihoods without understanding the impact of local institutions on wetland resources may only aggravate impoverishment. However, prioritizing sustainable wetland resource use may lead to short-term impoverishment with positive long-term effect on both community livelihood and sustainable wetland resources. This paper tries to address this difficulty by assessing local level institutions such as property rights and those that govern extraction of wetland resources in three wetland communities of Lake Victoria. The paper argues that reassessing institutions on 'tenure system' and 'access to' resources are desirable policy objectives that should guide such decisions.