Pioneering work in the last century has resulted in a widely accepted paradigm that primary production is strongly positively related to temperature and water availability such that the northern hemispheric forest carbon sink may increase under conditions of global warming. However, the terrestrial carbon sink at the ecosystem level (i.e. net ecosystem productivity, NEP) depends on the net balance between gross primary productivity (GPP) and ecosystem respiration (TER). Through an analysis of European eddy covariance flux data sets, we find that the common climate relationships for primary production do not hold for NEP. This is explained by the fact that decreases in GPP are largely compensated by parallel decreases in TER when climatic factors become more limiting. Moreover, we found overall that water availability was a significant modulator of NEP, while the multivariate effect of mean annual temperature is small and not significant. These results indicate that climate- and particularly temperature-based projections of net carbon balance may be misleading. Future research should focus on interactions between the water and carbon cycles and the effects of disturbances on the carbon balance of terrestrial ecosystems.