The Bale Mountains in the high lands of Southern Ethiopia are an example for a hugernimpact which rural population can create on natural resources such as forest and theirrnbio diversity. The heavy degradation of the remaining natural forests in this area hasrninitiated an intervention by the GTZ (Deutsche Gesellschaft fur TechnischernZusammenarbeit) in 1995 with a goal to protect the remaining afro montane forest andrnto develop, use and manage them sustainably. The community based approach which isrnnamed WAJIB (Walda Jirratootaa Boossona), has been implemented to achieve the goal.rnWAJIB granted an exclusive user right while at the same time entitling the communityrnwith a right to earn a livelihood from wood and non-wood income generating activities.rnThis research made an attempt to see the governance, effectiveness and sustainability ofrnthe approach while studying the contribution of the approach to enhanced capital assetsrnand livelihood outcome of the local community in the study area. The study deals with therncontribution of the approach to livelihoods, which is based on assessing the contributionrnof the approach to the livelihood of the poor employing the livelihood framework as arncheck list to collect, organize and analyze the data systematically. A mixed methodrnapproach (quantitative and qualitative) is employed to generate the required data. A totalrnof 100 samples were drawn to collect the required data. After analyzing the data thernstudy concludes the approach has scored a momentous result on the development of therncapital assets of the community, but the analysis shows that the approach could not solvernall the initial problems in the study area. While the natural capital is improved in most ofrnthe WAJIB areas it shows a deteriorating trend among the Non- WAJIBs due to therndifference in forest management among the two groups. In view of the financial capitalrnthe introduction of alternative income possibilities and enhanced income from thernexisting resources has boosted. In studying the improvement in the social capital, thoughrna strong social networks and connectedness is consolidated within and among the WAJIBrnmembers, a conflicting and hostile relationship is being observed among WAJIB andrnNon- WAJIB groups due to the creation ofWAJIB blocks with exclusive user rights for arnrelatively limited number of beneficiaries. The contribution of Eco tourism to livelihoodrnout comes is found to be imperative at varying degrees to the different livelihood outrncomes. While extremely important to meet cash needs; Furthermore, the study revealedrnthat individuals participating in eco tourism activity in the area are getting a meanrnmonthly income of 120 ETB, while the nonfinancial benefits accrue in similar vein. But arnfurther diffusion of income has to be supported. its contribution to people's empowermentrnmust be dealt in depth to made the local community respond authentically to a livelihoodrnstrategy they may pursue in the future.rnKey Words: WAJIB, Conservation, Livelihood, Capital Assets, Livelihood Out Comes