Observations have shown that the presence of moss or lichen has a profound effect on the surface water, energy and carbon exchange between the boreal forest and the atmosphere. The moss layer is also responsible for encouraging and maintaining the permafrost in this area. We have incorporated a Lichen and Moss Algorithm (LAMA) into the Biosphere-Atmosphere-Transfer-Scheme (BATS). We will use LAMA to study the effects of moss and lichen both in the BOREAS study areas and on the continental and global climates. We have reproduced many of the observed effects of boreal moss and lichen by modifying the thermal and hydraulic properties of the top layers in the new 10-layer soil model of BATS. Our initial results are promising. As observed, the soil beneath the moss layer is wetter than the soil without the moss layer, as well as being warmer in the winter and colder in the summer. Soil evaporation and surface runoff are reduced. Similar but smaller changes are seen with the lichen layer. We hope to incorporate the effects of moss and lichen on the carbon cycle soon. Our next step is to couple BATS/LAMA to the National Center for Atmospheric Research (NCAR) Community Climate Model (CCM3). This will allow the observed low near-surface relative humidities to be modeled, which is not possible in an off-line model, as relative humidity is a forcing variable. At this point, we anticipate being able to simulate the effect the lower humidity has on transpiration. This linking will also allow us to study the influence moss and lichen have on regional, continental and global climates. This model can be used to better assess the global impact of all boreal forests as well as the impact of changes in the extent of these forests