Many current assessments of future climate and hydrologic change suggest that current drylands around the globe could become drier with continued anthropogenic climate change. In some regions, such as the southwest U.S., there is an observed trend in this direction. This is particularly true for the Colorado River, where the nature of drought is shifting to a more temperature-dominated climate extreme. At the same time, however, some recent and influential scientific assessments suggest that temperature-driven drying could be compensated by large precipitation increases with little net increase to water supply risk. A new approach integrating the examination of temperature, precipitation and drought risk indicate that Colorado River flows, and water supplies in the Southwest more generally, are already being seriously affected, and that continued climate change could result in much larger water supply losses than widely thought, even if mean precipitation increases.