Dryland forests represent a significant but uncertain component of the terrestrial carbon sink, where rising CO₂ and intensifying drought and heat stress exert opposing controls on carbon and water fluxes. Using ED2.2-hydraulics calibrated against 21 years of flux tower and inventory data from Yatir Forest, an arid pine plantation in Israel, we simulated carbon fluxes, biomass dynamics, and water-use efficiency under current climate and high-emission scenarios (SSP3-7.0, SSP5-8.5) through 2100 using five CMIP6 projections.</p> <p>CO₂ fertilization initially enhanced productivity and biomass accumulation despite periodic drought, with the strongest response under SSP3-7.0. Under SSP5-8.5, compound heat and drought stress suppressed productivity below SSP3-7.0 levels despite higher CO₂ concentrations, triggering stand collapse in two projections and eliminating approximately 40 % of accumulated biomass. GAM-based driver decomposition showed that forest responses shifted from CO₂-dominated to interaction-dominated by late century, with compound heat and drought stress explaining 25–63 % of variance. Apparent biomass gains under severe scenarios reflected accumulation in fewer, larger surviving individuals as stand density declined, masking structural deterioration in aggregate metrics.</p> <p>Functional decline (NEP, WUE) preceded structural changes by 12–37 years depending on scenario, providing an early warning window before visible deterioration. These results show that CO₂ fertilization benefits cannot compensate for the compound climate extremes that accompany high emissions, and that functional indicators must be monitored alongside structural metrics to detect forest vulnerability in dryland afforestation systems.