At the northern high latitudes, rapid warming, associated changes in the hydrological cycle, and rising atmospheric CO2 concentrations, [CO2], are observed at present. Under rapid environmental changes, it is important to understand the current and future trajectories of the CO2 budget in high-latitude ecosystems. In this study, we present the importance of anomalous wet conditions and rising [CO2] on the long-term CO2 budget based on two decades (2003-2022) of quasicontinuous measurements of CO2 flux at a poorly drained black spruce forest on permafrost peat in interior Alaska. The long-term CO2 budget for the black spruce forest was a small sink of -53 ± 63 g C m-2 y-1. The CO2 sink increased from 49 g C m-2 y-1 for the first decade to 58 g C m-2 y-1 for the second decade. The increased CO2 sink was attributed to an 11.3% increase in gross primary productivity (GPP) among which 9% increase in GPP was explained by a recent increase in precipitation. Furthermore, a 3% increase in GPP in response to a 37-ppm increase in [CO2] was estimated from the data-model fusion. Our study shows that understanding the coupling between hydrological and carbon cycles and the CO2 fertilization effect is important for understanding the current and future carbon budgets of high-latitude ecosystems in permafrost regions.