The relationship among water use efficiency (WUE), productivity and carbon isotopic composition (δ13C) in white spruce (Picea glauca (Moench) Voss) seedlings was investigated. Sixteen hundred seedlings representing 10 controlled crosses were planted in the field in individual buried sand-filled cylinders. The soil water content in the cylinders was measured using time domain reflectometry over two growing seasons and seedling water use determined by water balance. Two watering treatments were imposed: irrigation and dry land. There was significant (1.6–2.0%c) genetic variation in needle δ13C. Ranking of crosses in terms of δ13C was generally maintained over watering treatments and there was not a significant genetic versus environmental interaction. There was a positive correlation between δ13C and both intrinsic and long-term WUE (more positive δ13C with increased WUE) and between δ13C and productivity, suggesting a correlation due to variation in photosynthetic capacity. Root to shoot ratios did not increase in water-stressed plants, indicating that responses to drought were primarily at the level of gas exchange, rather than through morphological changes. Our results indicate that it should be possible to use δ13C as a surrogate for WUE and to select white spruce genotypes for high WUE without compromising yield.