It is necessary to fully understand the economic conditions of local herders in order to find solutions to the conflicts between wildlife conservation and livestock rearing in remote areas of low-income countries. In the Kanchenjunga Conservation Area (KCA), Nepal, livestock depredation by snow leopards impacts on yak herders' livelihoods. Retaliatory killings of snow leopard by the herders have been reported and the concerned authorities recently initiated snow leopard conservation programmes. In 2001, interviews with the yak herders who used the pastures in the Ghunsa valley in the preceding year collected data on the incidence of livestock death caused by snow leopards. The annual net cash income of the yak herders was estimated by obtaining baseline values of sales and expenditure per livestock head through field measurement of dairy products and interviews with a sample of herders. As yet, the average annual damage does not appear to have adversely affected fundamental livelihoods in households with an average herd size (36.6 head). However, in the worst scenario of livestock depredation, households with medium or small-sized herds (<40 head) might risk their living conditions becoming unsustainable or having to withdraw from yak pastoralism. A supplementary interview showed that the majority of the herders, except those who took completely neutral attitudes towards the regional conservation and development programme, had negative views of the snow leopard conservation policy. For the snow leopard conservation programme in the KCA to be a success, there must be a system to compensate the herders' households for livestock damage.