The objective of this thesis research was to describe the consequences of pastoral livelihoodrndiversification strategies on the local ecology. A survey type of research was employed, by takingrna sample of 90 households in three kebeles out of the total 18 kebeles by using systematicrnsampling. Besides, focus group discussion and key informant interview were used.rnPastoral livelihood assets such as hWi;{li1 indigenous knowledge, social relationships among thernpastoralists and traditional institutions such as Gada system are important in wise managementrnof pastoral rangeland and natural resources. All the respondent households assume themselvesrnas pastoralists, while th eir livelihood is diversified 37% to crop farming, 10% torncharcoallfirewood selling, 12% to wage labor, 4% to petty trading, and 4% to mining. The datarnindicated that diversification to cropping and charcoallfirewood making cause negativernecological consequences such as shrinkage of rangelands, deforestation, and increased salinityrnof soil, soil erosion, damage to the 'gada' ceremonial sites (destruction of trees that were usedrnfor Gada gathering), extinction of grass species and wild animals, and threat to the mostrnresilient pastoral system. The study also found out the constraints of diversification to cropping,rnmining and charcoallfirewood making as climatic conditions of dry land areas, soil properties,rnrent out of land to urban dwellers, perception of pastoralists on water point development, lowrnlevel of skill of water users to utilize economically, prevalence of pests and shortage ofrnpesticides, and conflict on land sharing since communal land holding is accustomed to pastoralrnareas.rnThe following policy implication has been recommended: Pastoral livelihood diversificationrnstrategies should be focused to environmental friendly and ecologically suitable activities suchrnas value addition to the livestock products; irrigation water should be used for rangelandrnimprovement and for livestock drinking than for cropping; Pastoralists should be consulted andrnbe able to decide for their destiny; seasonal mobility has to be recognized as adaptationrnmechanism to the lowland ecology; pastoral livelihood assets such as human capital and socialrncapital that support ecological adaptation have to be improved; concerned government bureausrnand offices such as the Land and Environmental Protection Office have to be committed tornmanage the environmental issues; and pastoralism in this country is going to diminish and hencernit should be preserved for heritage.rnKey words: Pastpralislm, Livelihood, Ecology, Diversification