Peatland drainage is an important driver of global soil carbon loss and carbon dioxide (CO2) emissions. Restoration of peatlands by re‐flooding reverses CO2 losses at the cost of increased methane (CH4) emissions, presenting a biogeochemical compromise. While restoring peatlands is a potentially effective method for sequestering carbon, the terms of this compromise are not well constrained. Here, we present fourteen site‐years of continuous CH4 and CO2 ecosystem‐scale gas exchange over a network of restored freshwater wetlands in California, where long growing seasons, warm weather, and managed water tables result in some of the largest wetland ecosystem CH4 emissions ever recorded. These large CH4 emissions cause the wetlands to be strong GHG sources, while sequestering carbon and building peat soil. The terms of this biogeochemical compromise, dictated by the ratio between carbon sequestration and CH4 emission, vary considerably across small spatial scales, despite nearly identical wetland climate, hydrology, and plant community compositions.