This paper presents an econometric analysis of land-cover change in western Honduras. Ground-truthed satellite image analysis indicates that between 1987 and 1996, net reforestation occurred in the 1,015.12 km2 study region. While some reforestation can be attributed to a 1987 ban on logging, the area of reforestation greatly exceeds that of previously clear-cut areas. Further, new area was also deforested between 1987-1996. Thus, the observed land-cover changes most likely represent a complex mosaic of changing land-use patterns across time and space. We estimate a random-effects probit model to capture drivers of land-cover change that are spatial, temporal or both. We employ two techniques to correct for spatial error dependence in econometric analysis suitable to qualitative dependent variables. Lastly, we simulate the impact of anticipated changes in transportation costs on land cover. We find that market accessibility, increase in national coffee prices, and agricultural suitability are the most important determinants of recent land-cover change.