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A method for the combined correction of atmospheric and topographic effects has been developed. It accounts for horizontally varying atmospheric conditions and also includes the height dependence of the atmospheric radiance and transmittance functions to simulate the simplified properties of a threedimensional atmosphere. A Digital Elevation Model (DEM) is used to obtain information about surface elevation, slope, and orientation. Based on the Lambertian assumption the surface reflectance in rugged terrain is calculated. The method is restricted to high spatial resolution satellite sensors like Landsat TM and SPOT HRV, since some simplifying assumptions are being made to reduce the required image processing time. The possibilities and limitations of the method are critically discussed.