Exposure of plants to ozone reduces their photosynthetic capacity and results in less productivity and carbon sequestration. We have recently used the Terrestrial Ecosystem Model (TEM) to show the magnitude and extent of this effect historically for the U.S. and the world, with the maximum ozone damage occurring in hot-spot regions like the eastern U.S., Europe, and eastern China. In this study we have improved the hydrological model in order to provide a better representation of the mean stomatal conductance of the canopy, which determines the amount of ozone uptake that occurs. We are using a high-resolution ecosystem physiology model (Soil-Plant-Atmosphere (SPA) model) to aggregate stomatal conductance up to the coarse TEM temporal and spatial resolution. Experimental evidence indicates that ozone exposure results in lower stomatal conductance, thus limiting further ozone exposure and water loss. By replacing the current formulation of transpiration in TEM with a Penmon-Monteith approach using the computed canopy conductance, we are able to incorporate all the major links between ozone, stomatal conductance, and the hydrological cycle. The carbon and nitrogen stocks and fluxes are then recalibrated to ensure the correct values at each calibration site. Preliminary equilibrium results for Harvard Forest, MA show a reduction in the magnitude of the ozone effect from a 5.2% decrease in net primary production (NPP) to a 4.0% decrease. The difference is largely due to lower stomatal conductances that produce lower evapotranspiration (EET) rates closer to the observed rates. From 1996-1999, flux tower data show a mean July EET of 84 mm, while the model simulates an EET of 98 mm with a resulting mean stomatal conductance of 1.7 mm/s for July. Indirect effects of ozone on stomatal conductance are small because the reduced conductance, while reducing ozone uptake, also reduces CO2 uptake. We are now validating the model at several other well-studied temperate deciduous forest sites before parameterizing and validating it at other biomes throughout the world.