Understanding transpiration and plant physiological responses to environmental conditions is crucial for the design and management of vegetated engineered covers. Engineered covers rely on sustained transpiration to reduce the risk of deep drainage into potentially hazardous wastes, thereby minimizing contamination of water resources. This study quantified temporal trends of plant water potential (ψp), stomatal conductance (gs), and transpiration in a 4-year-old evergreen woody vegetation growing on an artificial sandy substrate at a mine waste disposal facility. Transpiration averaged 0.7 mm day−1 in winter, when rainfall was frequent, but declined to 0.2 mm day−1 in the dry summer, when the plants were quite stressed. In winter, the mean ψp was −0.6 MPa at predawn and −1.5 MPa at midday, which were much higher than the corresponding summer values of −2.0 MPa and −4.8 MPa, respectively. The gs was also higher in winter (72.1–95.0 mmol m−2 s−1) than in summer (<30 mmol m−2 s−1), and negatively correlated with ψp (p < 0.05, r2 = 0.71–0.75), indicating strong stomatal control of transpiration in response to moisture stress. Total annual transpiration (147.2 mm) accounted for only 22% of the annual rainfall (673 mm), compared with 77% to 99% for woody vegetation in Western Australia. The low annual transpiration was attributed to the collective effects of a sparse and young vegetation, low moisture retention of the sandy substrate, and a superficial root system constrained by high subsoil pH. Amending the substrate with fine-textured materials should improve water storage of the substrate and enhance canopy growth and deep rooting, while further reducing the risk of deep drainage during the early stages of vegetation establishment and in the long term. Overall, this study highlights the need to understand substrate properties, vegetation characteristics, and rainfall patterns when designing artificial ecosystems to achieve specific hydrological functions. Copyright © 2011 John Wiley & Sons, Ltd.