In the last two decades, severe droughts and extreme climate events have caused widespread tree mortality across many forest biomes globally, causing profound effects on the function of ecosystems and their services in terms of water and carbon regulation of the Earth System. Hot and dry conditions and increasing atmospheric demand for water from vegetation have been exceeding the capacity of the plants to pump water from soil to leaves, leading to the collapse of plant hydraulic systems. Large-scale tree mortality and the concomitant shifts in the land carbon and energy balance are expected to lead to large biogeochemical and biophysical climatic feedbacks. However, process level understanding of tree mortality and quantification of the links between carbon and water fluxes and feedback mechanisms have been limited by the lack of vegetation measurements at tree to landscape scales. Spaceborne observation of water in forested vegetation will allow us to address challenging questions about the fate of forests under water and heat stress, including impacts on carbon and water fluxes.The focus of this study is to greatly increase our current capacity to understand and predict the response of forest ecosystems to droughts and links between water and carbon processes in the earth’s biosphere. Our goal is to identify space-borne observational approaches, based on recent breakthroughs in remote sensing measurements of vegetation water content as well as related vegetation properties and ecosystem modelling. Focusing on recent results from in-situ studies, satellite observations of large-scale water stress in forest ecosystems, and improvements in the Earth System Models (ESM), the workshop will have the challenging task of identifying new measurement approaches and observational frameworks for future research programs and Earth Observing (EO) missions.