Plants influence ecosystem water balance through their physiological, phenological, and biophysical responses to environmental conditions, and their sensitivity to climate change could alter the ecohydrology of future forests. Here we use a combination of measurements, synthesis of existing literature, and modelling to address the consequences of climate change on ecohydrologic processes in forests, especially response to elevated CO2 (eCO(2)). Data assessed from five free-air CO2 enrichment (FACE) sites reveal that eCO(2)-reduced stomatal conductance led to declines in canopy transpiration and stand water use in three closed-canopy forest sites. The other two sites were in the early stages of stand development, where a strong eCO(2)-stimulation of canopy leaf area led to enhanced stand water use. In the sweetgum FACE experiment in Oak Ridge, Tennessee (USA), eCO(2) reduced seasonal transpiration by 10-16%. Intra-annual peak measured fluxes in transpiration ranged from 4.0-5.5 mm day(-1), depending on year. The Biome-BGC model simulated similar rates of transpiration at this site, including the relative reductions in response to eCO(2). As a result, simulations predict similar to 75 mm average annual increase in potential water yield in response to eCO(2). The direct effect of eCO(2) on forest water balance through reductions in transpiration could be considerable, especially following canopy closure and development of maximal leaf area index. Complementary, indirect effects of eCO(2) include potential increases in root or leaf litter and soil organic matter, shifts in root distribution, and altered patterns of water extraction. Copyright (C) 2010 John Wiley & Sons, Ltd.