Climate change is expected to affect the Alps by increasing the frequency and intensity of summer drought events with negative impacts on ecosystem water resources. The response of CO2 and H2O exchange of a mountain grassland to natural fluctuations of soil water content was evaluated during 2001-2009. In addition, the physiological performance of individual mountain forb and graminoid plant species under progressive soil water shortage was explored in a laboratory drought experiment. During the 9-year study period the natural occurrence of moderately to extremely dry periods did not lead to substantial reductions in net ecosystem CO2 exchange and evapotranspiration. Laboratory drought experiments confirmed that all the surveyed grassland plant species were insensitive to progressive soil drying until very low soil water contents (