Not only is the presence of water in soils essential to the growth of forests, but improved water yield and quality are becoming increasingly important management objectives on many forested lands. Forests and their associated soils and litter layers are excellent filters as well as sponges, and water that passes through this system is relatively pure. Forest disturbances of various kinds can speed up the movement of water from the system and, in effect, reduce the filtering action. While disturbances are inevitable, in most instances they need not contribute to poor water quality.

In mountainous territory the value of forests for watershed and erosion protection commonly exceeds their value as sources of lumber or places of recreation. The classic example is found in Switzerland and the neighbouring Alpine regions where the existence of pastoral settlements in the valley is wholly dependent on the maintenance of continuous forest cover on the foothills of the great peaks. This is combined skillfully with limited lumbering and widespread recreational use by tourists.

The guiding principle of management where erosion threatens is therefore the maintenance of continual cover. Ideally, this is achieved by single-stem harvesting; only one tree is felled at any one point, and the small gap so created is soon closed by the outward growth of its neighbours.

The progress of water, from the time of precipitation until it is returned to the atmosphere and is again ready to be precipitated, is called the hydrologic cycle. The properties of the soil plant system provide mechanisms that regulate interception, flow, and storage of water in the cycle. The water that moves downward into the soil, or infiltrates, is the difference between precipitation and the losses due to canopy interception, forest floor interception, and runoff. The amount of water stored in the soil is largely dependent on the physical properties of the soil, its depth, and the amount of water lost due to evaporation from the soil surface and transpiration from plants (evapotranspiration). Transpiration is the water absorbed by plant roots that is subsequently evaporated from their leaf surfaces. Deep forest soils have a high water-storage capacity. Unless they are very porous and drain freely, they have a water table below which the subsoil is saturated. The depth of the water table varies seasonally and is higher during periods of low evapotranspiration. Removal of the forest canopy in wet areas also raises the water table. Most tree roots need air to survive and cannot exploit soil below the water table. The drainage of land having a high water table usually increases the productivity of the forest.

When incoming precipitation exceeds the soil’s water-storage capacity, the excess water flows from the soil and can be measured as streamflow. The water yield of a forest is a measure of the balance between incoming precipitation and outflow of water as streamflow. The amount of increase in water yield depends on annual precipitation as well as the type and amount of overstory vegetation removed. As forests regrow following cutting, increases in streamflow decline as a result of increased transpirational losses. Streamflow declines are greater in areas that are restocked with conifers than in those restocked with hardwoods. This results from greater transpiration losses during the winter months from coniferous species.

Despite the uncertain balance of water gain and loss, forests offer the most desirable cover for water management strategies. Water yields are gradual, reliable, and uniform, as contrasted to the rapid flows of short duration characteristic of sparsely vegetated land. Unforested land sheds water swiftly, causing sudden rises in the rivers below. Over a large river system, such as that of the Mississippi, forests are a definite advantage since they lessen the risk of floods. They also provide conditions more favourable to fishing and navigation than does unforested land. All natural streams contain varying amounts of dissolved and suspended matter, although streams issuing from undisturbed watersheds are ordinarily of high quality. Waters from forested areas are not only low in foreign substances, but they also are relatively high in oxygen and low in temperature. Nonetheless, some deterioration of stream quality can be noted during and immediately after clear-cut harvesting, even under the best logging conditions. The potential for water-quality degradation following timber harvest may involve turbidity (suspended solids) as well as increases in temperature and nutrient content. Sediment arising from logging roads is the major water-quality problem related to forest activities in many areas.

The belief that forests increase rainfall has not been substantiated by scientific inquiry. Local effects can, however, prove substantial, particularly in semiarid regions where every millimetre of rain counts. The air above a forest, as contrasted with grassland, remains relatively cool and humid on hot days, so that showers are more frequent. Fog belts, such as those found along the Pacific seaboard of North America and around the peaks of the Canary Islands, give significant water yields through the interception of water vapour by tree foliage. The vapour condenses and falls in a process described as fog drip.