- Desertification is leading to large-scale changes in vegetation structure resulting from increased grazing pressure and drought which may, in turn, have further effects on ecosystem functioning. We examine how the changing functional group identity of plants may influence a range of biotic and abiotic ecosystem properties. To explore this question, we use a functional group removal experiment in which single functional groups (graminoids, legumes and non-leguminous forbs) were experimentally removed from an annual plant community in the Negev Desert, Israel. We conducted the experiment in both a high- and a low-resource environment to determine if identity effects are context dependent. We found full biomass compensation by remaining functional groups for the removal of any functional group, often with more, rather than larger, individuals comprising the compensatory growth. We also found few effects overall of functional group identity on ecosystem properties, with some dependence on environmental context. We found that the functional group with the largest proportional biomass often, but not always, had the largest effect on ecosystem properties. We contrast these results with those from previous removal experiments, the majority of which have been conducted in perennial ecosystems, and hypothesize that the transient nature of annual communities leads to fewer plant–soil interactions in the long term, and as a result fewer effects on ecosystem properties.