A water balance model is derived for Sitka spruce in which transpiration is estimated with a diffusion equation, and interception is predicted with the Gash model. A model drought stress index is defined. It assumes that transpiration and growth are maintained at maximum rates until the predicted soil moisture deficit equals 80% of the available water in the root zone. The model has been tested at Kirkhill forest, near Aberdeen, and at Monaughty forest, near Elgin. The drought stress index is validated by field investigations into the effects of drought on tree water status and growth at the Kirkhill podsol P60 site. At the Kirkhill podsol P49 site, the model accounts for 86% of the variation in measured stand annual volume increment (discounting suppressed trees). The model only accounts for 19-35% of the year to year variation in the measured growth of 15 trees at the Monaughty podsol P29 site. The poorer fit of the model at Monaughty is ascribed to periodic thinnings and lower quality growth data. Growth data for two Kirkhill peaty gleys (P57 and P59) demonstrates that drought stress is an unlikely occurrence on such sites. Model predictions of drought stress and evaporative demand are given for several locations across Scotland. It is shown that drought stress is rare in regions such as the West coast and Southern Uplands; in contrast to the East coast, rainfall is high and evaporation low. The model is generalised so that the effects of drought can be assessed simply as a function of annual rainfall and available water. On the basis of the limited number of sites investigated in this study, it is tentatively concluded that, given moderate available water (100-200 mm), reasonable yield classes (16-20) can be expected even when annual rainfall is as low as 700-800 mm.