We have used an ecosystem model, TREES (Terrestrial Regional Ecosystem Exchange Simulator), to test the hypothesis that competition for light limits reference canopy stomatal conductance (GSref; conductance at 1 kPa vapor pressure deficit) for individual tree crowns. Sap flux (JS) data was collected at an aspen-dominated unmanaged early successional site, and at a sugar maple dominated midsuccessional site managed for timber production. Using a Monte Carlo approach, JS scaled canopy transpiration (EC) estimates were used to parameterize two versions of the model for each tree individually; a control model treated trees as isolated individuals, and a modified version incorporated the shading effects of neighboring individuals on incident radiation. Agreement between simulated and observed EC was better for maple than for aspen using the control model. Accounting for canopy heterogeneity using a three-dimensional canopy representation had minimal effects on estimates of GSref or model performance for individual maples. At the Aspen site the modified model resulted in improved EC estimates, particularly for trees with lower GSref and more shading by neighboring individuals. Our results imply a link between photosynthetic capacity, as mediated by competitive light environment, and GSref. We conclude that accounting for the effects of canopy heterogeneity on incident radiation improves modeled estimates of canopy carbon and water fluxes, especially for shade intolerant species. Furthermore our results imply a link between ecosystem structure and function that may be exploited to elucidate the impacts of forest structural heterogeneity on ecosystem fluxes of carbon and water via LiDAR remote sensing.