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Hydrological models are widely used to assess the impact of climate variability and land use change on streamflow. However, it is uncertain whether these models are capable of simulating the impact given parameter interactions and inter-annual climate variability for large dry catchments. Two such catchments with extensive land clearing were selected to test three models – AWBM, Sacramento and SimHyd – in terms of their capacity to simulate streamflow during periods of vastly different levels of forest cover. AWBM outperformed others, and thus was further simplified as AWBM_Ca with minimum performance deterioration to have only one transferable parameter: the average storage capacity, Ca. A reduction of 21–28% in the Ca value for the post-clearing period indicates a decrease in the amount of water stored for transpiration and consequently an increase in runoff-generation capacity. AWBM_Ca can be used to predict the impact of forest cover change on streamflow with different Ca values. [ABSTRACT FROM AUTHOR]