AbstractPlant response to elevated CO2 concentration is known to increase leaf‐level water‐use efficiency through a reduction in stomatal opening. Recent studies have emphasized that increased plant water‐use efficiency can ameliorate the impact of drought due to climate change. However, there is a potentially counterbalancing impact due to the increased leaf area. We investigate long‐term trends (1951 to 2015) of observed streamflow in the Southeastern United States (SE US) and quantify the contribution of major drivers of streamflow changes using single factor climate modeling experiments from Community Land Model Version 5 (CLM5). The SE US streamflow observations do not exhibit a trend, which is in agreement with the CLM5 control experiment. Using the factorial set of CLM5 experiments, we find that increased leaf area under elevated CO2 leads to decreased runoff and completely counteracts increased runoff due to water‐use efficiency gains under elevated CO2 and land‐use change.