Peatlands at high latitudes have accumulated >400 Pg carbon (C) because saturated soil and cold temperatures suppress C decomposition. This substantial amount of C in Arctic and Boreal peatlands is potentially subject to increased decomposition if the water table (WT) decreases due to climate change, including permafrost thaw-related drying. Here, we optimize a version of the Organizing Carbon and Hydrology In Dynamic Ecosystems model (ORCHIDEE-PCH4) using site-specific observations to investigate changes in CO2 and CH4 fluxes as well as C stock responses to an experimentally manipulated decrease of WT at six northern peatlands. The unmanipulated control peatlands, with the WT 2 kg C m−2 over 100 years when WT is lowered by 50 cm, while permafrost peatlands temporally switched from C sinks to sources. These results highlight that reductions in C storage capacity in response to drying of northern peatlands are offset in part by reduced CH4 emissions, thus slightly reducing the positive carbon climate feedbacks of peatlands under a warmer and drier future climate scenario.