Increasing atmospheric carbon dioxide concentrations are expected to cause major changes in the world's climate over the next 50-100 yr. The impact of such changes on water resources, through changing precipitation and evaporation, will, however, be complicated by the direct effects of increasing CO2 on vegetation. In controlled environment experiments, higher CO2 levels cause the stomata of plants to close down, decreasing their rate of transpiration and increasing their water use efficiency. Reduced evapotranspiration would make more water available as runoff and could tend to offset the effects of any CO2-induced reductions in precipitation or enhance the effects of precipitation increases. We consider here, in a simple but revealing analysis, the relative sensitivity of runoff to these two processes, changes in precipitation and changes in evapotranspiration. We show that, for low runoff ratios, small changes in precipitation may cause large changes in runoff. The magnitude and direction of these changes is, however, strongly dependent on the magnitude of the direct CO2 effect on plant evapotranspiration.