In the remote Himalayan districts of Pithoragarh, India and Baitadi, Nepal, households are dependent on agriculture and forests for their livelihood. In this paper, we examine poverty–forest linkages by examining data from a survey of 652 households from these districts, who live on either side of the Mahakali River. Per capita income in Nepal is half of that in India. Yet, in the Himalayas, where households live in a similar geographic terrain, we find that households in Nepal are much better off in terms of assets and income relative to their Indian counterparts. Per capita, Nepalese also collect less than half the fuelwood collected by Indians. Remittances, economic diversification and better water and sanitation infrastructure may contribute to improved livelihood outcomes in Nepal. Forests are intrinsic to life in both districts, and institutional or technological differences may be responsible for disparities in forest use.