Peatlands and forested wetlands can cover a large fraction of the land area and contain a majority of the regional carbon pool in wet northern temperate landscapes. We used the LANDIS-II forest landscape succession model coupled with a model of plant community and soil carbon responses to water table changes to explore the impacts of declining water table on regional carbon pools in a peatland- and wetland-rich landscape in northern Wisconsin, USA. Simulations indicated that both biomass accumulation and soil decomposition would increase as a consequence of drying. In peatlands, simulated water table declines of 100 cm led to large increases in biomass as well as short-term increases in soil carbon, whereas declines of 40 cm led to continuous declines in soil carbon and smaller increases in biomass, with the net result being a loss of total carbon. In non-peat wetlands, biomass accumulation outweighed soil carbon loss for both scenarios. Long-term carbon cycle responses were not significantly affected by the time scale of water table decline. In general, peatland carbon storage over the first 50–150 years following drainage was neutral or increasing due to increased plant growth, whereas carbon storage over longer time scales decreased due to soil carbon loss. Although the simplicity of the model limits quantitative interpretation, the results show that plant community responses are essential to understanding the full impact of hydrological change on carbon storage in peatland-rich landscapes, and that measurements over long time scales are necessary to adequately constrain landscape carbon pool responses to declining water table.