Water scarcity, drought and salinity are among the most important environmental constraints challenging crop productivity in the arid and semi-arid regions of the world, especially rain-fed production systems. This publication presents the outcome of an IAEA coordinated research project which is aimed at increasing agronomic water-use efficiency in wheat and rice production. The studies show that the carbon isotope discrimination (CID) which is the ratio of the variation of carbon-13 versus carbon -12 in plant samples (leaf and grain) , is a good selection tool for identifying high yielding genotypes of wheat under drought stress environments for both pre-anthesis and post-anthesis stages. The CID of flag leaf can also potentially be used to select rice genotypes for salinity tolerance and for selecting parental lines for breeding.