Deficiency of long-term data on performance of multipurpose tree plantations in degraded lands delimits the scope of realization of economic benefits from the United Nations-REDD+(Reducing Emissions from Deforestation and Forest Degradation) initiative of climate change mitigation by making payments for reducing emissions in developing countries. This study reports survival, growth and carbon stocks over a period of 20 years of mixed-species (Albizia lebbeck, Alnus nepalensis, Boehmaria rugulosa, Celtis australis, Dalbergia sissoo, Ficus glomerata, Grewia optiva, Prunus cerasoides, Pyrus pashia and Sapium sebiferum) plantations (planting density of 110 trees ha−1 of each species and random mixing such that neighboring individuals did not belong to the same species) established with people’s participation in abandoned agricultural land (AAL) and highly degraded forest land (HDFL), in Central Himalaya, India. Trees were lopped and crops were grown at the AAL site, while grasses were cut after planting at the HDFL site. Mortality occurred during the initial 3-year-period at both sites but after 7 years only at the AAL site. After 20 years, average survival at the AAL site was 87% compared to 51% at the HDFL site, with B. rugulosa, G. optiva and F. glomerata showing higher mortality than other species at the latter site. Annual height, girth and aboveground biomass increment rates across species and sites over 20-year period varied in the range of 23–84 cm year−1, 1.3–3.9 cm year−1 and 1.0–8.0 kg tree−1 year−1, respectively. The site as well as species effects tended to diminish with age. At the age of 20 years, B. rugulosa accumulated aboveground biomass 5.7-fold, G. optiva 3.2-fold, C. australis 2.3-fold, F. glomerata and P. cerasoides 1.5–1.6-fold and, A. nepalensis and D. sissoo 1.2-fold greater at the AAL site compared to the HDFL site. S. sebiferum and A. lebbeck had marginally lower biomass at the AAL site than the HDFL site, while the site effect was not significant in P. pashia. Over the 20-year period, tree-crop mixed system at the AAL site, apart from supporting better tree growth, provided larger quantities of utilizable biomass (206 Mg of food, fodder and fuelwood ha−1) compared to the HDFL site (14.4 Mg of palatable grasses ha−1). The two sites had similar total (vegetation + litter + soil) C accumulation rates (2.3–2.5 Mg C ha−1 year−1). With ban on income from timber in the current policies, payments for carbon sequestration from exclusive tree planting (US $ 37 family−1 year−1) would be negligible compared to the income from crops (US $ 400–900 family−1 year−1) in tree-crop mixed system. There is an urgent need of policies (i) safeguarding economic interests of local people from tree planting in degraded lands and (ii) enhancing silvicultural and ecological knowledge of multipurpose tree species to optimize multiple benefits from them.