Separation of water from vegetable oil base stocks for environmentally acceptable tractor/hydraulic fluids was studied. Mixtures of canola, a representative vegetable oil, with mineral oil and three synthetic esters were emulsified and allowed to separate. In additional work, hydrogen bonding interfering compounds, alcohols and nitrogen containing compounds, were added to base stocks and finished fluids to improve the water rejection properties. Two of the synthetic esters were found to improve water rejection in economical concentrations, while the other formed a stable emulsion with the vegetable oil and water. The mineral oil tested formed a stable water-in-oil emulsion with low concentrations of canola oil, then reacheed a maximum rejection concentration as the canola increased, since canola forms a oil-in-water emulsion. The hydrogen bonding inhibitors worked with base stocks but were not helpful when the additive package was included.