Water budgets were constructed over a 22 month period for young uncut or coppiced (resprouting) Eucalyptus kochii Maiden & Blakely subsp. plenissima Gardner (Brooker) trees in twin-row belts through annual pasture at a deep sand site (320 mm yr^–1 mean rainfall) near Kalannie, Western Australia. Budgets were based on measurements of tree transpiration, canopy interception of incident rainfall, and neutron-based transects of soil water changes within and outside rooting catchments of trees. Transpiration of uncut 5- to 7-year-old trees sited over a fresh perched aquifer averaged 3.7 mm day^–1 across the 5 m wide tree belt, compared to 2.4 mm day^–1 for trees distant from the aquifer, and an average of 1.5 mm day^–1 for 0–2 year coppice. Rain incident upon canopies of uncut trees contributed only 8–14% of their transpiration after evaporation losses were accounted for. Trees away from the aquifer dried soil profiles down to a hardpan at 5–7 m depth and up to 12.5 m out from the canopy edge, while also obtaining an estimated 13–16% of their transpirational requirement from below the hardpan. The equivalent of one third of rain falling on tree-free areas away from the aquifer was lost in deep drainage, but with 17% tree cover present, net deep drainage was reduced to 21% of rainfall where trees were coppiced, or 5% where trees were left uncut. Taking also into account the additional drying of soil by trees, hydrologic balance would have been maintained with a 20% canopy cover of 0–2 year coppices or with 10% devoted to uncut trees.