The earth’s mountains continue to lose water. Glaciers are melting and mountain snow/rain balance tilts increasingly liquescent. Water is running off sooner—sometimes overfilling reservoirs, causing flooding, and setting the stage for late-season shortages. One adaptive strategy is to recover and enhance water-storage capacities of headwater riparian systems. Grazing, a common use of headwater lands, affects both soils and vegetation. To better understand how grazing might affect water storage and other ecosystem services of high elevation riparian wetlands, we measured soil-profile temperatures, soil organic matter (SOM), and phytomass at six sites in the upper Sweetwater River sub-basin of Wyoming, USA, where fence lines allowed us to contrast grazing management. We found grazed wetlands consistently had warmer soils than fenced wetlands. We found added evidence that SOM is important in both soil temperature control and water-storage potential of wetlands. We review evidence that warmer soil temperatures and drying cause loss of SOM with the implied concomitant C losses through erosion and emissions. We recommend land managers of temperate-climate headwater systems consider the need to end growing seasons with full stands of riparian vegetation to reduce soil warming and to build organic matter—particularly on lands where municipalities and other downstream water users are seeking long-term increases in water yields and less flooding.