Forest environmental resources provide substantial contributions to the wellbeing of many rural dwellers. However, the level of forest use and the degree of reliance on forest environmental products differ across households. The factors that condition a household's economic reliance on a particular economic activity in general and on forest environmental resources in particular may vary depending on the resource endowment of the household, the household's demographic and economic characteristics, and exogenous factors such as markets, prices and technologies. This paper identifies the factors that condition a household's livelihood strategy choice with a particular focus on forest products. For this, we use the livelihood approach as a framework of analysis. Environmentally augmented household income data were collected from 360 sample households in Tigray, Northern Ethiopia. On the basis of the share of forest environmental income in total household income, sample households were Clustered into distinct livelihood strategies. Student's t-test and ANOVA were used to test income differences among the clusters. Multinomial logit (MNL) regression on asset-based explanatory variables was run to identify the main factors that determine households' livelihood strategy choice and forest dependence. The analyses indicate that differential access to, or endowment of, livelihood assets determines the choice of a household's strategy. Asset-poor households should be encouraged to engage in activities with higher economic return. (c) 2008 Elsevier Ltd. All rights reserved.