Mountain economies are undergoing transformation from traditional agrarian to more industrial or service-oriented economies. Such changes invariably have socioeconomic impacts on nearby communities and lead to fragmentation and rural depopulation. Sikkim, a small state of India in the Eastern Himalayas, has recently embarked on a program of hydroelectricity project construction. This study examined community perceptions of the environmental and socioeconomic impacts of these projects in 3 rural areas and considers implications for future sustainable livelihoods. While benefits such as employment have accrued to the rural community from these economic development projects, changes in land use and in people's occupations may have adverse impacts on their future livelihoods. We argue that there is a need to support new types of land-based economic activities on abandoned agricultural lands, reclaim degraded lands, and introduce new products and production methods.