Prediction and understanding of the regional impact of climate change in the American Midwest is of critical importance to agriculture, economy, and society. In particular, predicting the sign and magnitude of the future change in soil moisture conditions is a significant research challenge. During the summer, the input of water to the regional soil moisture (rainfall) is significantly smaller than the output from the same system (evaporation plus surface runoff). This deficit is currently supplied by drawing from the stored soil water in the saturated and unsaturated zones. Therefore, the fundamental research question raised is what will happen to the magnitude of this deficit in the coming decades? If this deficit increases significantly, e.g. due to a significant increase in evaporation, dry soil moisture conditions would develop every year at the end of the summer season. Predicting the magnitude of this deficit under climate change scenarios would require the use of models that are capable of simulating not only the right current climatology of rainfall, evaporation, and runoff, but also the right sign and magnitude of the sensitivity of these processes to climate change. Observations of the water cycle and surface energy balance from the Illinois State Water Survey and FLUXNET will be used to characterize the current climatology in Illinois and examine the sensitivity of latent heat flux to changes in available energy. Implications of the results from regional climate model simulations will be discussed in the context of global climate change and future agricultural productivity.