Abstract Urbanization is known to elevate storm runoff, but how it influences carbon cycle and ecosystem productivity through altering the evapotranspiration (ET) process is less clear. We examined the combined effects of urbanization including change in impervious surface area (ISA) and climate variability on the water and carbon balances of the Qinhuai River Basin (QRB) over 2001–2018. QRB represents a typical rice paddy-dominated region that experienced rapid urbanization in southern China. We improved a monthly scale water supply stress index ecosystem service model by integrating local eddy flux measurements and high-resolution remote sensing data. We found a significant downward trend in both ET (−4.6 mm yr−1, p < 0.05) and gross primary productivity (GPP) (−10.4 gC m−2 yr−1, p < 0.05) but a significant upward trend in water yield (Q) (+28.6 mm yr−1, p < 0.05). These ecosystem function changes coincided with a 96% increase in urban areas, 1.9-fold increase in ISA, and a 37% reduction in rice paddy fields. The mean annual watershed GPP decreased from 1048 gC m−2 to 998 gC m−2 while the annual Q increased from 284 mm to 669 mm from 2001 to 2018. Scenario modeling experiments suggested that the negative impacts of loss of rice paddy fields and increase in ISA on ET and GPP overwhelmed the positive impacts of climate warming. The reduction in GPP and increase in Q were largely attributed to the increases in ISA, not necessarily due to changes in land use types (e.g. urban area). The expansion of urban area, increase in ISA and reduction in leaf area index, and increase in precipitation explained the increase in Q. Our research offers insight about the interactions of carbon and water cycles through the critical ET processes under a changing climate and land surface characteristics at a watershed level. Our modeling tool and analysis provides land managers and policy makers information for designing effective ‘Urban Nature-based Solutions’ to mitigate the negative environmental effects of urbanization on carbon and water resources.
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