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To address these knowledge gaps, we estimated the low‐density growth rates of populations in drought conditions with low neighbour cover and in ambient conditions with average neighbour cover for 82 species in six grassland communities across the Central Plains and Southwestern United States. We assessed the relationship between population tolerance to drought and resistance to competition and determined if this relationship was consistent across a precipitation gradient. We also tested whether population growth rates could be predicted using plant functional traits.

Across six sites, we observed a positive correlation between low‐density population growth rates in drought and in the presence of interspecific neighbours. This positive relationship was particularly strong in the grasslands of the northern Great Plains but weak in the most xeric grasslands. High leaf dry matter content and a low (more negative) leaf turgor loss point were associated with high population growth rates in drought and with neighbours in most grassland communities.

Synthesis: A better understanding of how both biotic and abiotic factors impact population fitness provides valuable insights into how grasslands will respond to extreme drought. Our results advance plant strategy theory by suggesting that drought tolerance increases population resistance to interspecific competition in grassland communities. However, this relationship is not evident in the driest grasslands, where above‐ground competition is likely less important. Leaf dry matter content and turgor loss point may help predict which populations will establish and persist based on local water availability and neighbour cover, and these predictions can be used to guide the conservation and restoration of biodiversity in grasslands.

We experimentally reduced growing season precipitation by 66% in two cold‐semi‐arid grassland sites in northern China for four consecutive years to explore the drought resistance of CWM traits as well as their recovery 2 years following the drought. In addition, we isolated the effects of both interspecific and intraspecific trait variability on shifts in CWM traits.

At both sites, we observed significant effects of drought on interspecific and intraspecific trait variability which, in some cases, led to significant changes in CWM traits. For example, drought led to reduced CWM plant height and leaf phosphorous content, but increased leaf carbon content at both sites, with responses primarily due to intraspecific trait shifts. Surprisingly, these CWM traits recovered completely 2 years after the extreme drought. Intraspecific trait variability influenced CWM traits via both positive and negative covariation with interspecific trait variability during drought and recovery phases.

These findings highlight the important role of interspecific and intraspecific trait variability in driving the response and recovery of CWM traits following extreme, prolonged drought.

We experimentally removed 66% of growing season precipitation for 4 years across five arid and semi‐arid grasslands in northern China and assessed how this multi‐year drought impacted community‐weighted means (CWMs) of seed traits, seed trait functional diversity and above‐ground net primary productivity (ANPP).

Experimental drought had limited effects on CWM traits and the few effects that did occur varied by site and year. For three separate sites, and in different years, drought reduced seed length and phosphorus content but increased both seed and seed‐coat thickness. Additionally, drought led to increased seed functional evenness, divergence, dispersion and richness, but only in some sites, and mostly in later years following cumulative effects of water limitation. However, we observed a strong negative relationship between drought‐induced reductions in ANPP and CWMs of seed‐coat thickness, indicating that a high abundance of dominant species with thick seeds may increase ecosystem resistance to drought. Seed trait functional diversity was not significantly predictive of ANPP, providing little evidence for a diversity effect.

Our results suggest that monitoring community composition with a focus on seed traits may provide a valuable indicator of ecosystem resistance to future droughts despite inconsistent responses of seed trait composition overall. This highlights the importance of developing a comprehensive seed and reproductive traits database for arid and semi‐arid grassland biomes.

Drought experiments are among the most numerous climate change manipulations and have been deployed across a wide range of biomes, although most are conducted in short‐statured, water‐limited ecosystems. Collectively, these experiments have enabled ecologists to quantify the negative responses to drought that occur for most aspects of ecosystem structure and function. Multiple meta‐analyses of responses have also enabled comparisons of relative effect sizes of drought across hundreds of sites, particularly for carbon cycle metrics. Overall, drought experiments have provided strong evidence that ecosystem sensitivity to drought increases with aridity, but that plant traits associated with aridity are not necessarily predictive of drought resistance. There is also intriguing evidence that as drought magnitude or duration increases to extreme levels, plant strategies may shift from drought tolerance to drought escape/avoidance.

We highlight three areas where more drought experiments are needed to advance our understanding. First, because drought is intensifying in multiple ways, experiments are needed that address alterations in drought magnitude versus duration, timing and/or frequency (individually and interactively). Second, drivers of drought may be shifting—from precipitation deficits to rising atmospheric demand for water—and disentangling how ecosystems respond to changes in hydrological ‘supply versus demand’ is critical for understanding drought impacts in the future. Finally, more attention should be focussed on post‐drought recovery periods since legacies of drought can affect ecosystem functioning much longer than the drought itself.

We conclude with a call for a fundamental shift in the focus of drought experiments from those designed primarily as ‘response experiments’, quantifying the magnitude of change in ecosystem structure and function, to more ‘mechanistic experiments’—those that explicitly manipulate ecological processes or attributes thought to underpin drought responses.