Trees are spectacular at managing water. Strategies vary by species, climate and soil conditions. 

Roots: Absorb water from the soil and store small amounts temporarily in parenchyma cells (these power houses are responsible for photosynthesis, storage, secretion and regeneration).
Deep roots can tap into groundwater during dry periods.
Trunk and Stem: The xylem primarily transports water but can also act as a storage reservoir.
Sapwood (the living part of the xylem) stores water in its cells.
Leaves store only minimal water, mostly for short-term use in photosynthesis and transpiration.

Succulent leaves, as with cacti can store more.

The outer bark has limited storage but helps reduce water loss.

Mechanisms of Storage

Capillary storage: Water fills tiny cell walls and spaces in xylem.

Elastic storage: Living cells like parenchyma can expand when hydrated, releasing water gradually during drought.

Osmotic storage: Cells pull water in via solutes, maintaining hydration in dry times.

Seasonal Water Management

Deciduous trees store water in roots and trunks during fall/winter when leaves drop.

Evergreen trees maintain constant water storage in sapwood to support year-round photosynthesis.

Drought-adapted species (e.g., pines, oaks in dry regions) can store water in trunks and branches to survive dry months.

Water Movement vs. Storage

Xylem sap flow: Water moves upward from roots to leaves due to transpiration pull.

Hydraulic capacitance: Trees can buffer water loss during high transpiration by drawing from stored water in trunks and branches.

Some studies show large temperate trees can release 10–20% of their daily water demand from stored water during peak drought.
Trees with thicker trunks and dense sapwood generally store more water. These include...

Redwoods

Oaks

and Baobabs (which are infamous).

Note: Stress indicators are leaf wilting, cracking, or reduced growth signalling insufficient water storage.