A novel framework is presented for the analysis of ecophysiological field measurements and modelling. The hypothesis ‘leaves minimise the summed unit costs of transpiration and carboxylation’ predicts leaf-internal/ambient CO2 ratios (ci/ca) and slopes of maximum carboxylation rate (Vcmax) or leaf nitrogen (Narea) vs. stomatal conductance. Analysis of data on woody species from contrasting climates (cold-hot, dry-wet) yielded steeper slopes and lower mean ci/ca ratios at the dry or cold sites than at the wet or hot sites. High atmospheric vapour pressure deficit implies low ci/ca in dry climates. High water viscosity (more costly transport) and low photorespiration (less costly photosynthesis) imply low ci/ca in cold climates. Observed site-mean ci/ca shifts are predicted quantitatively for temperature contrasts (by photorespiration plus viscosity effects) and approximately for aridity contrasts. The theory explains the dependency of ci/ca ratios on temperature and vapour pressure deficit, and observed relationships of leaf δ13C and Narea to aridity.