Too much of a good thing (nutrients or water) actually decreases the diversity of species in an ecosystem while it increases the productivity of a few species, according to a grassland experiment conducted by University of Minnesota researchers.
The reduction in species diversity occurs because increasing the amounts of limiting resources, such as nitrogen and water, makes an ecosystem more homogeneous and consequently reduces the number of opportunities for competing species to coexist. Put another way, it reduces the number of niches, allowing a few species to dominate.