The Earth's climate and its hydrological cycle encompasses both abiotic and the living world, the terrestrial and marine biosphere. The climate system and the biosphere interact via energy and momentum fluxes , and through the bio-geo-chemical cycles. Hence, living vegetation, along with other characteristics of the land surface, plays a key role in modulating the Earth's water cycle and the climate. Vegetation is a dynamic state variable of the climate system, not just an indicator of climate state.

Vegetation cover affects precipitation. During cloud-free daytime conditions, heat fluxes near the ground surface are affected by the partitioning of absorbed radiative energy into sensible and latent heat. On bare dry land, this results in a strong heating of the surface, a strong sensible heat flux in the atmospheric surface layer and a large soil heat flux. Evaporation is limited. By contrast, in wet/vegetated land the incoming radiation is mostly used for evaporation. In that case, the sensible heat flux and the soil heat flux are usually much smaller than the latent heat flux. Such differences lead to significantly different atmospheric boundary layers above dry and wet (vegetated) land. The amount of water in shallow atmospheric boundary layer which forms above wet/vegetated surface can be much higher than over bare dry land. As a result clouds and precipitation generated in these different conditions can be quite different.

The vegetation cover also may influence climate and water cycle via atmospheric aerosols. Recent work in the Amazon shows that in the wet season the balance of natural sources and sinks of cloud condensation nuclei (CCN) is almost identical to marine values, which challenges our perception of continental regions normally to be 'CCN-unlimited'. A large fraction of the CCN present over Amazonia turns out to be directly of biogenic origin. This implies that the vegetation itself may play a key role in influencing regional precipitation patterns, which in turn influences the distribution and functioning of the vegetation.

The interaction between atmosphere and vegetation in some regions can be strong enough to affect global climate. These regions coincide with Earth's "hot spots" of the past and current athropogenic land use changes. Given that the three major tropical convective heating centres are associated with the land surfaces in Africa, Amazon, and the maritime continent of SE Asia, changes in vegetation cover in these regions could effect the structure, the strength and positioning of convective storms. Even small changes in the magnitude and spatial pattern of tropical convection may then alter the magnitude and pattern of upper -level tropical outflow which feeds the higher altitude zonal jet, therefore affecting regions far beyond the actual "hot spots". Apart from affecting the mean zonal flow, alternation in tropical convection may also force anomalous Rossby waves which can propagate to higher latitudes. Therefore, land cover changes which result in changes in tropical convection may affect weather and climate remotely both in the tropics and at high latitudes, analogously to well documented remote effects attributed to the opposing phases of ENSO.