Abstract. Peat decomposition in managed peatlands is responsible for a decrease of 0.52 GtC yr−1 in global carbon stock and is strongly linked to drainage to improve the agricultural bearing capacity, which increases aeration of the soil. Microbial aerobic decomposition is responsible for the bulk of the net CO2 emission from the soil and could be reduced by wetting efforts or minimizing drainage. However, the effects of rewetting efforts on microbial respiration rate are largely unknown. In this study, we aimed to obtain more process-based understanding of these rewetting effects on peat decomposition by integrating high-quality field measurements and literature relationships with an advanced hydrological modelling approach where soil moisture and temperature are centralized as the main drivers for peat decomposition. In 2020 and 2021, two dairy farming peatlands, where subsoil irrigation and drainage (SSI) was tested against a control situation, were continuously monitored for CO2 fluxes, groundwater table, soil moisture and soil temperature. After successfully representing field hydrology and carbon dynamic measurements within our process-based model, we further explored the effects of rewetting under different weather conditions, water management strategies (raising ditchwater levels and SSI) and hydrological seepage settings. To represent peat carbon dynamics we introduced a methodology to estimate potential aerobic microbial respiration rate, based on potential respiration rate curves for soil temperature and water-filled pore space (WFPS). Measurements show that rewetting with SSI resulted in higher summer groundwater levels, soil temperatures and WFPS. SSI reduced the net ecosystem carbon balance (NECB) by 1.58 ± 0.56 kg CO2 m−2 yr−1 (83 ± 25 %) and 0.66 ± 0.62 kg CO2 m−2 yr−1 (28 ± 15 %) for Assendelft and Vlist respectively in 2020. SSI had a negligible effect in 2021 for both research locations, due to more precipitation, lower temperatures and different SSI management (in Assendelft) as compared to 2020. Simulated rewetting effects were in agreement with measured rewetting effects. Model simulations indicate that raising ditchwater levels always reduces peat respiration rates. Furthermore, we found that the application of SSI (i) reduces yearly peat respiration rates in a dry year and/or with downward hydrological fluxes and (ii) increases peat respiration rates in a wet year and/or when upward groundwater seepage is present. Moreover, combining SSI with high ditchwater levels or pressurizing SSI systems will further reduce peat respiration rates. We show that our process-based approach based on temperature and WFPS soil conditions to determine NECB represents observed variance to a greater extent than empirical relationships that involve average groundwater level observations or simulations. Therefore, we recommend using this kind of approach to estimate the effectiveness of rewetting. When this is not possible, we recommend using mean summer groundwater level instead of mean annual groundwater level as a proxy to estimate NECB. Such relations between mean groundwater levels and NECB are prone to underestimating NECB for SSI parcels.