Abstract: Observational data from Tongyu cropland and degraded grassland sites recorded from January to December 2008 were used to investigate the effects of land use and cover changes on evapotranspiration and surface water budget. The results show that although the two sites are only 5 km apart, the annual total evapotranspiration of the cropland ecosystem was 28.2 mm higher than that of the degraded grassland ecosystem. This difference occurred mainly in the non-growing season. In addition, the annual total water budget of the cropland was determined to be 51.1 mm, which is 35.6% lower than that of the degraded grassland. In the growing season, the water budgets of both sites were positive. Although the water budget in the degraded grassland remained positive during the non-growing season, that in the cropland was negative. These results indicate that the cropland ecosystem, which involves a higher extent of human activities, is affected by more severe water supply issues in semi-arid areas and that land usage changes introduced by human activities aggravate aridity trends. Moreover, further analysis suggests that a positive water budget does not necessarily guarantee that the land surface includes an ample water supply. The Priestley-Taylor coefficients of both sites were determined to be far less than 1.0, which indicates that the actual evapotranspiration value did not reach the equilibrium evapotranspiration value due to limited water availability at the land surface. Therefore, the surface soil of the semi-arid area was adversely affected by an insufficient water supply. This result is illustrated by the soil texture of the semi-arid area, which is characterized by severe erosion and high porosity. Under such conditions, although the water budget is positive; however, the precipitation is likely to infiltrate to deeper soil layers that serve as groundwater storage, eventually resulting in water shortage at the shallow layer of soil.