ABSTRACT Response of leaf area index (LAI) is the key determinant for predicting impacts of the elevated CO2 (eCO2) on water budgets. Importance of the changes in functional attributes of vegetation associated with eCO2 for predicting responses of LAI has rarely been addressed. In this study, the WAter Vegetation Energy and Solute (WAVES) model was applied to simulate ecohydrological effects of the eCO2 at two free‐air CO2 enrichment (FACE) experimental sites with contrasting vegetation. One was carried out by the Oak Ridge National Laboratory on the forest (ORNL FACE). The other one was conducted by the University of Minnesota on the grass (BioCON FACE). Results demonstrated that changes in functional attributes of vegetation (including reduction in specific leaf area, changes in carbon assimilation and allocation characteristics) and availability of nutrients are important for reproducing the responses of LAI, transpiration and soil moisture at both sites. Predicted LAI increased slightly at both sites because of fertilization effects of the eCO2. Simulated transpiration decreased 10·5% at ORNL site and 13·8% at BioCON site because of reduction in the stomatal conductance. Predicted evaporation from interception and soil surface increased slightly (<1·0 mm year−1) at both sites because of increased LAI and litter production, and increased soil moisture resulted from reduced transpiration. All components of run‐off were predicted to increase because of significant decrease in transpiration. Simulated mean annual evapotranspiration decreased about 8·7% and 10·8%, and mean annual run‐off increased about 11·1% (59·3 mm year−1) and 9·5% (37·6 mm year−1) at the ORNL and BioCON FACE sites, respectively. Copyright © 2014 John Wiley & Sons, Ltd.