The partitioning of carbon and interactions which cause limitations on gas exchange and growth under conditions of a limited supply of water and nutrients are discussed. Possible mechanisms of effects of air humidity on stomatal functioning and carbon assimilation are described. Also, it is shown that stomata respond to a signal from the root when the soil dries out prior to leaf wilting. Stomatal conductance determines canopy transpiration if the aerodynamic boundary layer resistance is low, such as in trees. Water shortage significantly affects extension growth and the root-shoot ratio at the whole- plant level. But experiments with xylem-tapping mistletoes show that stem growth can also be promoted by the presence of the mistletoe even when there is no apparent signal from the subtending shoot except the flow in the stem xylem. It appears that the internal plant water status may not affect gas exchange and carbon partitioning unless the plant fails to maintain a flow of water through the leaf epidermis and root tip.