Abstract Many semi‐arid areas worldwide are becoming degraded, in the form of C 4 grasslands being replaced by C 3 shrublands, which causes an increase in surface runoff and erosion, and altered nutrient cycling, which may affect global biogeochemical cycling. The prevention or control of vegetation transitions is hindered by a lack of understanding of their temporal and spatial dynamics, particularly in terms of interactions between biotic and abiotic processes. This research investigates (1) the effects of soil erosion on the δ 13 C values of soil organic matter (SOM) throughout the soil profile and its implications for reconstructing vegetation change using carbon‐isotope analysis and (2) the spatial properties of erosion over a grass‐shrub transition to increase understanding of biotic‐abiotic interactions by using δ 13 C signals of eroded material as a sediment tracer. Results demonstrate that the soils over grass‐shrub transitions are not in steady state. A complex interplay of factors determines the input of SOM to the surface horizon of the soil and its subsequent retention and turnover through the soil profile. A positive correlation between event runoff and δ 13 C signatures of eroded sediment was found in all plots. This indicates that the δ 13 C signatures of eroded sediment may provide a means of distinguishing between changes in erosion dynamics over runoff events of different magnitudes and over different vegetation types. The development of this technique using δ 13 C signatures of eroded sediment provides a new means of furthering existing understanding of erosion dynamics over vegetation transitions. This is critical in terms of understanding biotic‐abiotic feedbacks and the evolution of areas subject to vegetation change in semi‐arid environments. Copyright © 2008 John Wiley & Sons, Ltd.