Eddy covariance data are increasingly used to estimate parameters of ecosystem models and for proper maximum likelihood parameter estimates the error structure in the observed data has to be fully characterized. In this study we propose a method to characterize the random error of the eddy covariance flux data, and analyse error distribution, standard deviation, cross- and autocorrelation of CO₂ and H₂O flux errors at four different European eddy covariance flux sites. Moreover, we examine how the treatment of those errors and additional systematic errors influence statistical estimates of parameters and their associated uncertainties with three models of increasing complexity ? a hyperbolic light response curve, a light response curve coupled to water fluxes and the SVAT scheme BETHY. In agreement with previous studies we find that the error standard deviation scales with the flux magnitude. The previously found strongly leptokurtic error distribution is revealed to be largely due to a superposition of almost Gaussian distributions with standard deviations varying by flux magnitude. The crosscorrelations of CO₂ and H₂O fluxes were in all cases negligible ( R ² below 0.2), while the autocorrelation is usually below 0.6 at a lag of 0.5 hours and decays rapidly at larger time lags. This implies that in these cases the weighted least squares criterion yields maximum likelihood estimates. To study the influence of the observation errors on model parameter estimates we used synthetic datasets, based on observations of two different sites. We first fitted the respective models to observations and then added the random error estimates described above and the systematic error, respectively, to the model output. This strategy enables us to compare the estimated parameters with true parameters. We show that the correct implementation of the random error standard deviation scaling with flux magnitude significantly reduces the parameter uncertainty and often yields parameter retrievals that are closer to the true value, than by using ordinary least squares. The systematic error leads to systematically biased parameter estimates, but its impact varies by parameter. The parameter uncertainty slightly increases, but the true parameter is not within the uncertainty range of the estimate. This means that the uncertainty is underestimated with current approaches that neglect selective systematic errors in flux data. Hence, we conclude that potential systematic errors in flux data need to be addressed more thoroughly in data assimilation approaches since otherwise uncertainties will be vastly underestimated.