Climate change can reduce surface-water supply by enhancing evapotranspiration in forested mountains, especially during heatwaves. We investigate this ‘drought paradox’ for the European Alps using a 1,212-station database and hyper-resolution ecohydrological simulations to quantify blue (runoff) and green (evapotranspiration) water fluxes. During the 2003 heatwave, evapotranspiration in large areas over the Alps was above average despite low precipitation, amplifying the runoff deficit by 32% in the most runoff-productive areas (1,300–3,000 m above sea level). A 3 °C air temperature increase could enhance annual evapotranspiration by up to 100 mm (45 mm on average), which would reduce annual runoff at a rate similar to a 3% precipitation decrease. This suggests that green-water feedbacks—which are often poorly represented in large-scale model simulations—pose an additional threat to water resources, especially in dry summers. Despite uncertainty in the validation of the hyper-resolution ecohydrological modelling with observations, this approach permits more realistic predictions of mountain region water availability.