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Immense land-cover changes in Iceland over the last millennium have encompassed birch (Betula pubescencs) woodland depletion and extensive soil erosion; few studies have focused on spatial distribution change of birch woodland in Iceland over centuries. The main objectives of this study were to (1) map the changes of birch woodland cover in Þjórsárdalur (14,000� ha) in southern Iceland, over a period of 350� years from late sixteenth to early twentieth century, and (2) explain the impact of socio-economic and natural forces on the woodland cover over three periods: 1587–1708, 1708–1880 and 1880–1938. We used a combined approach of historical reconstruction from diverse written archives, GIS-techniques and field work. About half of the Þjórsárdalur valley was covered by birch woodland in the late sixteenth century but over a period of 350� years 94� % of woodland had been depleted. The woodland was intensively used for firewood and charcoal making during the period with limited land management restriction. The main driving force for this development was socio-economic, where the form of ownership was a fundamental factor for the fate of the woodland. Harsh climate and volcanism further exacerbated the woodland during times when it had become fragmented and beyond its state of recovery.