Increased atmospheric CO2 often but not always leads to large decreases in leaf conductance. Decreased leaf conductance has important implications for a number of components of CO2 responses, from the plant to the global scale. All of the factors that are sensitive to a change in soil moisture, either amount or timing, may be affected by increased CO2. The list of potentially sensitive processes includes soil evaporation, run‐off, decomposition, and physiological adjustments of plants, as well as factors such as canopy development and the composition of the plant and microbial communities. Experimental evidence concerning ecosystem‐scale consequences of the effects of CO2 on water use is only beginning to accumulate, but the initial indication is that, in water‐limited areas, the effects of CO2‐induced changes in leaf conductance are comparable in importance to those of CO,2‐induced changes in photosynthesis. Above the leaf scale, a number of processes interact to modulate the response of canopy or regional evapotran‐spiration to increased CO2. While some components of these processes tend to amplify the sensitivity of evapo‐transpiration to altered leaf conductance, the most likely overall pattern is one in which the responses of canopy and regional evapotranspiration are substantially smaller than the responses of canopy conductance. The effects of increased CO2 on canopy evapotranspiration are likely to be smallest in aerodynamically smooth canopies with high leaf conductances. Under these circumstances, which are largely restricted to agriculture, decreases in evapotranspiration may be only one‐fourth as large as decreases in canopy conductance. Decreased canopy conductances over large regions may lead to altered climate, including increased temperature and decreased precipitation. The simulation experiments to date predict small effects globally, but these could be important regionally, especially in combination with radiative (greenhouse) effects of increased CO2. Copyright © 1995, Wiley Blackwell. All rights reserved