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 general circulation models. 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. Driver decomposition showed that forest responses shifted from CO2-dominated to interaction-dominated by late century, with compound heat and drought stress explaining 39 %–66 % of the relative importance of all drivers by late century. Apparent biomass gains under severe scenarios reflected accumulation in fewer, larger surviving individuals as stand density declined, masking structural deterioration in aggregate metrics. Functional decline (productivity, water-use efficiency) preceded structural changes by 7–37 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.