The relationship between species richness and ecosystem variability is shaped by the mechanism of coexistence.

Theory relating species richness to ecosystem variability typically ignores the potential for environmental variability to promote species coexistence. Failure to account for fluctuation-dependent coexistence may explain deviations from the expected negative diversity-ecosystem variability relationship, and limits our ability to predict the consequences of increases in environmental variability. We use a consumer-resource model to explore how coexistence via the temporal storage effect and relative nonlinearity affects ecosystem variability. We show that a positive, rather than negative, diversity-ecosystem variability relationship is possible when ecosystem function is sampled across a natural gradient in environmental variability and diversity. We also show how fluctuation-dependent coexistence can buffer ecosystem functioning against increasing environmental variability by promoting species richness and portfolio effects. Our work provides a general explanation for variation in observed diversity-ecosystem variability relationships and highlights the importance of conserving regional species pools to help buffer ecosystems against predicted increases in environmental variability.