In this paper we address the following question: how can efficient water use strategies evolve and persist when natural selection favors aggressive but inefficient individual water use? A tragedy of the commons, in which the competitive evolutionary outcome is lower than the ecosystem optimum (in this case defined as maximum productivity), arises because of (1) a trade-off between resource uptake rate and resource use efficiency and (2) the open access character of soil water as a resource. Competitive superiority is determined by the lowest value of the steady state soil moisture, which can be minimized by increasing water uptake or by increasing drought tolerance. When the competing types all have the same drought tolerance, the most aggressive water users exclude efficient ones, even though they produce a lower biomass when in monoculture. However, plants with low water uptake can exclude aggressive ones if they have enough drought tolerance to produce a lower steady state soil moisture. In that case the competitive superior is also the best monoculture, and there is no tragedy of the commons. Spatial segregation in soil moisture dynamics favors the persistence of conservative water use strategies and the evolution of lower maximum transpiration rates. Increasing genetic relatedness between competing plants favors the evolution of conservative water use strategies. Some combinations of soil moisture spatial segregation and intensity of kin selection may favor the evolution and maintenance of multiple types of plant water use. This occurs because a cyclical pattern of species replacement can arise where no single type can exclude all other types.