Abstract: A study was conducted at the WRRI-NARC, Islamabad under controlled conditions of rainfall and high temperatures to simulate hot-arid environment for establishment of plants like Eucalyptus camaldulensis and Acacia arabica in plastic bags with an objective to reduce volume of water required for establishment and to achieve higher survival rates. The results indicated that number of irrigations were reduced to half under bags of 20 x30 size compared to control and volume of water used, was reduced by 60-70 per cent. The irrigation interval was almost doubled in 20 x30 polyethylene bags compared to control. The volume of water per irrigation also reduced by 27-55 per cent, reducing the irrigation cost considerably. The peak daily reference crop evapotranspiration (ETr) of 9.41 mm/day was observed during June. Water requirement was reduced to about 1/4th of the ETr in plastic bags compared to about 3/4th of the ETr in control. The increase in water use efficiency for plastic bags was 4-5 times that of the control. Plastic bag of 20 x30 size resulted in 16 per cent increase in growth for Eucalyptus. The increase was around 59 per cent for Kikar under bag size of 18 x24 compared to control.