Under dry conditions, fungi can bridge gaps between pockets of moisture and continue to survive and grow, even when soil moisture is too low for most bacteria to be active. Fungi are able to use nitrogen up from the soil, allowing them to decompose surface residue which is often low in nitrogen. Fungi are aerobic organisms. Soil which becomes anaerobic for significant periods generally loses its fungal component. Anaerobic conditions often occur in waterlogged soil and in compacted soils.
Fungi are especially extensive in forested lands.
Forests have been observed to increase in productivity as fungal biomass increases. Most trees and agricultural crops depend on or benefit substantially from mycorrhizae. The level of dependency on mycorrhizae varies greatly among varieties of some crops, including wheat and corn. Land management practices affect the formation of mycorrhizae. The number of mycorrhizal fungi in soil will decline in fallowed fields or in those planted to crops that do not form mycorrhizae.