Abstract. The vegetation’s response to climate change is a significant source of uncertainty in future terrestrial biosphere model projections. Constraining climate-carbon cycle feedbacks requires improving our understanding of direct, as well as long-term, plant physiological responses to climate. In particular, the timescales and strength of memory effects arising from both extreme events (i.e., droughts and heatwaves) and structural lags in the systems have largely been overlooked in the development of models. This is despite the knowledge that plant responses to climatic drivers occur across multiple timescales (seconds to decades), with the impact of climate extremes resonating for many years. Using data from 13 eddy covariance sites, covering two rainfall gradients (256 to 1491 mm yr−1) in Australia, in combination with a hierarchical Bayesian model, we characterised the timescales and magnitude of influence of antecedent drivers on daily net ecosystem exchange (NEE) and latent heat flux (λE). Model fit varied considerably across sites when modelling NEE, with R2 values of between 0.30 and 0.83. Latent heat was considerably more predictable across sites, with R2 values ranging from 0.56 to 0.95. When considered at a continental scale, both fluxes were more predictable when memory effects were included in the model. These memory effects accounted for an average of 17 % of the NEE predictability and 15 % for λE. The importance of environmental memory in predicting fluxes increased as site water availability declined (ρ = −0.72, p < 0.01 for NEE, ρ = −0.62, p < 0.05 for λE). However, these relationships did not necessarily hold when sites were grouped by vegetation type. We also tested a k-means clustering plus regression model to confirm the suitability of the Bayesian model for modelling these sites. The k-means approach performed similarly to the Bayesian model in terms of model fit, demonstrating the robustness of the Bayesian framework for exploring the role of environmental memory. Our results underline the importance of capturing memory effects in models used to project future responses to climate change, especially in water-limited ecosystems. Finally, we demonstrate a considerable variation in individual site predictability, driven to a notable degree by environmental memory, and this should be considered when evaluating model performance across ecosystems.