Predicting the vulnerability of permafrost carbon (C) to climate change requires simulation of the permafrost’s annual dynamics coupled with the C cycle, as well as the soil water status which determines aerobic or anaerobic decomposition of organic matter. Quantitative long-term water and energy balance studies are particularly scarce circumpolar and almost absent from Siberia, but are of great importance for the validation of climate and permafrost surface schemes within climate models. Furthermore, due to the complex nature and non linearity of processes, quantitative predictions vary largely. Within the research group SPARC (Sensitivity of the permafrost system’s water and energy balance under changing climate: A multiscale perspective) the carbon, water, and heat flux cycles in the complex Arctic landscapes at scales that range from metres to kilometres are investigated. Two field sites, located in the continuous permafrost environment are studied in detail since 1998: Bayelva (close to Ny-Alesund, Spitsbergen) and Samoylov (Lena Delta, Siberia). We combine field measurements of permafrost processes, pools, and fluxes, with remote sensing data and numerical climate models at local and regional scales. A quantitative process understanding is developed by identifying key processes of the seasonal and annual energy, water and carbon balance and the factors that affect these processes. This includes: representation of sub-grid cell variability in the landcover (especially with regard to water bodies), the quantification of the annual surface energy balance, the importance of snow cover formation and ablation for the permafrost thermal regime and the relationships between thermal and hydrologic processes and carbon cycle. The data collection as well as process understanding is also used within the large collaborative EU 7th framework project PAGE21 (Changing Permafrost in the Arctic and its Global Effects in the 21st Century (PAGE21). This project aims to understand and quantify the vulnerability of permafrost environments to a changing global climate, and to investigate the feedback mechanisms associated with increasing greenhouse gas emissions from permafrost zones.