Short rotation Eucalyptus plantations offer great potential for increasing wood-fiber production in the Southeastern U. S.. Eucalyptus plantations are highly productive, but they transpire a lot of water and are thought to use more water than other species. On the other hand, Eucalyptus plantations can have a high water use efficiency (WUE = amount of wood produced per water transpired), that potentially offsetts negative impacts of high water use. Water use requirements and WUE of Eucalyptus plantations in the Southeastern U.S. are largely unknown. An important question is whether Eucalyptus plantations use more water than contemporary intensively managed pine plantations, primarily loblolly (Pinus taeda) and slash (Pinus elliotii) pine. In one of the first studies in the Southeastern U.S., Forest Service scientists compared water use and WUE in similarly aged E. benthamii and loblolly pine plantations. Individual tree transpiration and growth were measured over one year to estimate stand transpiration and WUE. The E. benthamii stand transpired 27 percent more water annually than loblolly, but had a 21 percent higher WUE. Furthermore, E.benthamii transpired 92 percent of annual precipitation compared to 67 percent for loblolly. This short study suggests that while Eucalyptus plantations may have greater WUE than pines, they will have greater absolute water use. Further research is needed to quantify the hydrological impact of Eucalyptus plantations in order to develop management and silvicultural practices that maximize productivity and WUE without compromising water resources.