Alpine meadow dominated by Kobresia pygmaea forms both an important ecosystem and the main pasture resource on the Qinghai–Tibetan Plateau, and its degradation is detrimental to ecosystem health and the pastoral economy. This paper reports research on the impacts of possible degradation on soil and biological properties related to water status, as water availability is fundamental to grass productivity. It also considers herders' perceptions towards, and adaptation to, the changing environment. The research was carried out in and around Kema village in Nagqu Prefecture, Northern Tibet. The biotic and abiotic properties of the K. pygmaea meadow are significantly different in patches with diverse soil and vegetation combinations, which include normal meadow, crusted meadow, and bare soil. Change of species composition, low species diversity, coarsening of soil, and lack of soil moisture and organic matter are found under bare soil after erosion of the turf layer. Low infiltration rates and reduced dew deposition are found under crusted meadow. Herders have witnessed some aspects of the deterioration of meadow quality and have noticed some climatic variations. However, they do not consistently link changing meadow quality to climate change and rarely have a clear idea of what overgrazing is, as although their mobility has been reduced, they may think that they are still using pastures periodically as in transhumance. Adapting current privatisation policies by considering herders' traditions and needs, and balancing scientific knowledge with local perception and knowledge, will help to guarantee long‐term benefits through sustainable use of the fragile alpine meadow resource. Copyright © 2014 John Wiley & Sons, Ltd.