Climate change has impacted the environmental conditions in which forest plantations grow worldwide. Droughts and extreme temperatures have compromised the survival and productivity of plantations, and the effects on carbon and water balance have increased risks to sustained productivity and sustainability. Interestingly, opportunities for improvement rely on a better understanding of the ecophysiological response of species or genotypes, their tolerance or resistance to thermal and water stress, and genetic–environmental interactions. Our manuscript summarizes tree and stand-level major reported ecophysiological responses that could challenge the establishment and development of forest plantations under future climate change scenarios. The manuscript discusses potential climate change effects on plantation forest productivity, carbon balance, water use, and water use efficiency, and suggests some potential silvicultural strategies to avoid or reduce risks under uncertain climate scenarios. An integrated approach to understanding the linkages between water resource availability and plant-stand carbon balance is proposed to provide sustainable management that may alleviate the social and environmental concerns associated with challenges relating to climate change for managed forests and the forest industry.