[Truncated abstract] Insufficient water use by annual crop and pasture species leading to costly rises in saline watertables has prompted research into potentially profitable deep-rooted perennial species in the Western Australian wheatbelt. Native mallee eucalypts are currently being developed as a short-rotation coppice crop for production of leaf oils, activated carbon and bio-electricity for low rainfall areas (300—450 mm) too dry for many of the traditional timber and forage species. The research in this study was aimed at developing a knowledge base necessary to grow and manage coppiced mallee eucalypts for both high productivity and salinity control. This firstly necessitated identification of suitable species, climatic and site requirements favourable to rapid growth, and understanding of factors likely to affect yield of the desirable leaf oil constituent, 1,8-cineole. This was undertaken using nine mallee taxa at twelve sites with two harvest regimes. E. kochii subsp. plenissima emerged as showing promise in the central and northern wheatbelt, particularly at a deep acid sand site (Gn 2.61; Northcote, 1979), so further studies focussed on physiology of its resprouting, water use and water-use efficiency at a similar site near Kalannie. Young E. kochii trees were well equipped with large numbers of meristematic foci and adequate root starch reserves to endure repeated shoot removal. The cutting season and interval between cuts were then demonstrated to have a strong influence on productivity, since first-year coppice growth was slow and root systems appeared to cease in secondary growth during the first 1.5—2.5 years after cutting. After decapitation, trees altered their physiology to promote rapid replacement of shoots. Compared to uncut trees, leaves of coppices were formed with a low carbon content per unit area, and showed high stomatal conductance accompanied by high leaf photosynthetic rates. Whole-plant water use efficiency of coppiced trees was unusually high due to their fast relative growth rates associated with preferential investments of photosynthates into regenerating canopies rather than roots. Despite relatively small leaf areas on coppice shoots over the two years following decapitation, high leaf transpiration rates resulted in coppices using water at rates far in excess of that falling as rain on the tree belt area. Water budgets showed that 20 % of the study paddock would have been needed as 0—2 year coppices in 5 m wide twin-row belts in order to maintain hydrological balance over the study period. Maximum water use occurred where uncut trees were accessing a fresh perched aquifer, but where this was not present water budgets still showed transpiration of uncut trees occurring at rates equivalent to 3—4 times rainfall incident on the tree belt canopy. In this scenario, only 10 % of the paddock surface would have been required under 5 m wide tree belts to restore hydrological balance, but competition losses in adjacent pasture would have been greater