Photosynthesis involves a tradeoff between the uptake of carbon and the loss of water. Intrinsic water-use efficiency is an indicator of this tradeoff that is pivotal for understanding plant responses to climate change. Global increases in atmospheric CO2 concentration have increased intrinsic water-use efficiency, but this relationship is also modulated by water availability. Here, we have identified that a severe, multidecadal drought in the American Southwest has caused some of the largest increases in plant water-use efficiency ever observed.