The fate of carbon net ecosystem production (NEP) in a large coastal embayment affected by upwelling-in situ sedimentation versus offshore export-has been quantitatively assessed. Exchange fluxes have been calculated with a 2D transient inverse method based on the heat budget of the embayment. Incorporation of measured inorganic and organic carbon pools (dissolved and suspended) into the inverse calculation allows estimation of fluxes and net budgets of carbon species. At the time-scale of an upwelling event (similar to2 weeks) 68% of NEP (0.54 g C m(-2) day(-1)) sinks to the organic-rich sediments of the embayment. The remaining 32% of NEP is retained in the water column as dissolved (0.14 g C m(-2) day(-1)) and suspended (0.11 g C m(-2) day(-1)) organic carbon. This material is exported to the adjacent shelf surface waters. At the short time scale (2-4 days), there is a manifest de-coupling between the net production and export of dissolved and suspended materials. Whereas NEP of dissolved organic carbon is exported from the system under upwelling-favourable conditions, NEP of suspended organic carbon is exported only during strong upwelling events. (C) 2003 Elsevier Science B.V. All rights reserved.