A carbon fixation system by large-scale afforestation in arid regions is being researched near Leonora in Western Australia. A tree species that naturally grows in the area, E. camaldulensis, has been planted at the afforestation trial sites. In arid regions, water use efficiency by a tree, defined as the ratio of its organic dry matter production to its water consumption, is an important factor in tree growth for establishing a strategy for afforestation. In this study, the soil water content conditions under which E. camaldulensis could grow in arid regions were investigated and the water use efficiency, daily sap density flux, transpiration rate, and photosynthetic rates were measured. The results show that a thick soil layer (>2 m) effectively collected runoff water and could maintain the growth of E. camaldulensis. The daily sap flux density of the tree was closely related to the water content of the soil between 0.5 to and 1.0 m in depth. The water use efficiency of productivity, WUEP [g-dry mass increase/kg-water consumption] depended on the season, and the average WUEP over a 1-year period was about 5. The maximum WUEP occurred during the period of minimum soil water content, and decreased with its increase. These results were confirmed by measurements of transpiration and photosynthetic rates.