Wetland biogeochemistry is strongly influenced by water and temperature dynamics, and these interactions are currently poorly represented in ecosystem and climate models. A decline in water table of approximately 30 cm was observed at a wetland in Northern Wisconsin, USA over a period from 2001–2007, which was highly correlated with an increase in daily soil temperature variability. Eddy covariance measurements of carbon dioxide exchange were compared with measured CO2 fluxes at two nearby forests in order to distinguish wetland effects from regional trends. As wetland water table declined, both ecosystem respiration and ecosystem production increased by over 20% at the wetland, while forest CO2 fluxes had no significant trends. Net ecosystem exchange of carbon dioxide at the wetland was not correlated with water table, but wetland evapotranspiration decreased substantially as the water table declined. These results suggest that changes in hydrology may not have a large impact on shrub wetland carbon balance over inter-annual time scales due to opposing responses in both ecosystem respiration and productivity.