The use of structural equation modeling (SEM) is often motivated by its utility for investigating complex networks of relationships, but also because of its promise as a means of representing theoretical concepts using latent variables. In this paper, we discuss characteristics of ecological theory and some of the challenges for proper specification of theoretical ideas in structural equation models (SE models). In our presentation, we describe some of the requirements for classical latent variable models in which observed variables (indicators) are interpreted as the effects of underlying causes. We also describe alternative model specifications in which indicators are interpreted as having causal influences on the theoretical concepts. We suggest that this latter nonclassical specification (which involves another variable type—the composite) will often be appropriate for ecological studies because of the multifaceted nature of our theoretical concepts.

In this paper, we employ the use of meta‐models to aid the translation of theory into SE models and also to facilitate our ability to relate results back to our theories. We demonstrate our approach by showing how a synthetic theory of grassland biodiversity can be evaluated using SEM and data from a coastal grassland. In this example, the theory focuses on the responses of species richness to abiotic stress and disturbance, both directly and through intervening effects on community biomass. Models examined include both those based on classical forms (where each concept is represented using a single latent variable) and also ones in which the concepts are recognized to be multifaceted and modeled as such. To address the challenge of matching SE models with the conceptual level of our theory, two approaches are illustrated, compositing and aggregation. Both approaches are shown to have merits, with the former being preferable for cases where the multiple facets of a concept have widely differing effects in the system and the latter being preferable where facets act together consistently when influencing other parts of the system. Because ecological theory characteristically deals with concepts that are multifaceted, we expect the methods presented in this paper will be useful for ecologists wishing to use SEM.