Soil evaporation (Es) is considered to be a non-productive component of evapotranspiration (ET). So,measures which moderate Es may influence the amount of water available for transpiration (T), the productivecomponent of ET. Field experiments investigating the effects of rice straw mulch on componentsof the water balance of irrigated wheat were conducted during 2006'2007 and 2007'2008 in Punjab,India, on a clay loam soil. Daily Es was measured using mini-lysimeters, and total seasonal ET was estimatedas the missing term in the water balance equation. Mulch lowered total Es over the crop growthseason by 35 and 40 mm in relatively high and low rainfall years, respectively. Much of this 'saved water'was partitioned into T, which increased by 30 and 37 mm in the high and low rainfall years, respectively.As a result, total ET was not affected by mulch in either year. In both years, there was a trend for higherbiomass production and grain yield with mulch, but with significant differences only in 2006'2007.Transpiration efficiency (TE) with respect to grain yield was 18.8'19.1 kg ha'1mm'1 in 2006'2007, and14.6'16.4 kg ha'1mm'1 in 2007'2008. While wheat grown in the presence of mulch tended to lower TE,this was only significant in 2007'2008. The results suggest that while mulching of well-irrigated wheatreduces Es, it does not 'save' water because the crop compensates by increased T and reduced TE.