Differing perceptions of the impacts on hydrological functions of tropical forest clearance and conversion to other land uses have given rise to growing and often heated debate about directions of public environmental policy in southeast Asia. In order to help bring more balance and clarity to such debate, this paper reviews a wide range of available scientific evidence with respect to the influence exerted by the presence or absence of a good forest cover on regional climate (rainfall), total and seasonal water yield (floods, low flows), as well as on different forms of erosion and catchment sediment yield under humid tropical conditions in general and in southeast Asia in particular. It is concluded that effects of forest disturbance and conversion on rainfall will be smaller than the average decrease of 8% predicted for a complete conversion to grassland in southeast Asia because the radiative properties of secondary regrowth quickly resemble those of the original forest again. In addition, under the prevailing 'maritime' climatic conditions, effects of land-cover change on climate can be expected to be less pronounced than those of changes in sea-surface temperatures. Total annual water yield is seen to increase with the percentage of forest biomass removed, with maximum gains in water yield upon total clearing. Actual amounts differ between sites and years due to differences in rainfall and degree of surface disturbance. As long as surface disturbance remains limited, the bulk of the annual increase in water yield occurs as baseflow (low flows), but often rainfall infiltration opportunities are reduced to the extent that groundwater reserves are replenished insufficiently during the rainy season, with strong declines in dry season flows as a result. Although reforestation and soil conservation measures are capable of reducing the enhanced peak flows and stormflows associated with soil degradation, no well-documented case exists where this has also produced a corresponding increase in low flows. To some extent this will reflect the higher water use of the newly planted trees but it cannot be ruled out that soil water storage opportunities may have declined too much as a result of soil erosion during the post-clearing phase for remediation to have a net positive effect. A good plant cover is generally capable of preventing surface erosion and, in the case of a well-developed tree cover, shallow landsliding as well, but more deep-seated (>3 m) slides are determined rather by geological and climatic factors. A survey of over 60 catchment sediment yield studies from southeast Asia demonstrates the very considerable effects of such common forest disturbances as selective logging and clearing for agriculture or plantations, and, above all, urbanisation, mining and road construction. The 'low flow problem' is identified as the single most important 'watershed' issue requiring further research, along with the evaluation of the time lag between upland soil conservation measures and any resulting changes in sediment yield at increasingly large distances downstream. It is recommended to conduct such future work within the context of the traditional paired catchment approach, complemented with process-based measuring and modelling techniques. Finally, more attention should be paid to the underlying geological controls of catchment hydrological behaviour when analysing the effect of land use change on (low) flows or sediment production. © 2004 Elsevier B.V. All rights reserved.