The fine-mesh model introduces a land surface model interface that represents subgrid scale land variability by a sub-mesh imposed on each atmospheric model grid. A water and energy-conserving scheme disaggregates atmospheric conditions to the fine-mesh model grid and aggregates surface fluxes back to the atmospheric grid. In the original model, the atmospheric conditions (i.e. temperature, specific humidity, precipitation, etc.) are uniformly distributed among fine-mesh grid points within a GCM grid square. The next step in the development of the fine-mesh model is to introduce physically based parameterizations that allow for non-uniform distribution of the atmospheric forcing. Several methods for spatial disaggregation of atmospheric forcing will be presented. Changes in the simulated climate introduced by these subgrid parameterizations are then explained by direct local land-atmosphere interaction processes and remote climate responses.