In this paper we discuss the principal results of participatory surveys that were conducted between June 2001 and May 2002 in 95 communities (villages) in the rural hillside areas in Honduras. The principal objectives of the study were to determine the main income earning strategies at the community level; identify the most important determinants of these strategies; and analyze the principal factors that determine the use of conservation technologies and investments. A total of eight different income-earning strategies were identified that largely reflect differences in comparative advantages between different communities. We used a multinominal logit model to explain the choice of income earning strategy as determined by biophysical factors (elevation, rainfall); socioeconomic variables(population density, market access); social factors (land tenure, education) and institutional factors (community-based and external organizations). For example, communities located at relatively high altitudes and with good market access are more likely to specialize in coffee production or vegetable growing. Ownership of the land encourages working on the own farm while discouraging off-farm work. In addition, a probit model was used to establish that the adoption of conservation technologies and investments is determined not only by the type of income earning strategy but also by population density land tenure, and presence and type of organizations. Even though no specific information was collected regarding the costs and benefits of specific conservation practices, in many communities people expressed that the low profitability of many of these practices seriously hampers their wider diffusion. The results of this study have some important policy implication. First, since communities that grow cash crops can be expected to have earn higher incomes than communities that grow basic grains only, significant investments in extending and improving the road network are needed in order to achieve a better integration of many rural hillside communities into the market economy as a vehicle towards reducing transaction costs, thus contributing to a reduction in poverty. Second, even though the potential of profitable conservation technologies and investments depend on the type of income earning strategy pursued, other factors such as population density and assistance from local and external organizations play a crucial role as well. The positive impact of population on the adoption of agricultural intensification, but becomes only effective at relatively high levels of population density and most communities in the rural hillsides of Honduras have not reached that stage yet. Finally and despite the fact that the available information did not permit a quantitative analysis of the relationship between income earning strategies and income levels, the qualitative analysis suggests that in order to overcome the tremendous poverty in which the majority of the inhabitants of the rural hillside areas of Honduras live and to improve their access to basic public services, massive public investments are needed in the areas of public health, education, electricity and communication facilities.