The water cycle affects the climate of an area because if there is more water in a certain area, then there'd be more evaporation. If there's more evaporation, there'd be more condensation. More condensation means more clouds and the clouds would be filled with more water vapor. More clouds and water vapor means more rain and severe storms. On the other hand, if there is less water in an area, there'd be less evaporation causing less condensation, causing fewer clouds and rain.
there are multiple other ways the water cycle affects the climate, but these are just a couple.