It cools the atmosphere by absorbing some heat — heat flows from warmer to cooler — and by increased cloud cover that changes the energy budget of the planet. (watertechbyrie.com)
Increasing cloud cover causes rising temperatures, which in turn causes more evaporation and therefore more clouds and higher temperatures and so on, and so on. (joannenova.com.au)
Water vapour however and increasing cloud cover also increase global temperatures. (earthtimes.org)