Drainage alters the carbon storage and accumulation functions of peatlands, but the long‐term effects of drainage ditches, and their restoration, on peatland development are poorly understood. Timescales of monitoring studies in ditch‐drained and restored peatlands are typically limited to a few years, and occasionally decades. In addition, experimental studies seldom monitor spatial changes in peat structure caused by ditches, despite such changes affecting water flow and water retention in peat. Ecosystem models offer an alternative to experimental studies and can help explain how complex systems such as peatlands may respond to external disturbances. Here we report on a 2‐D application of a peatland development model (DigiBog) to explore how contour‐parallel ditches, and their damming, affect the ecohydrology of peatlands over decades to centuries, using blanket peatlands as a case study. Drainage resulted in the rapid loss of peat due to increased oxic decay. The majority of these losses occurred in the first 100 years after the ditch was created, but water table dynamics were altered even centuries later. Restoration halted the loss of peat and encouraged net peat accumulation, although the amount lost in 100 years of drainage had not been replaced 200 years after the ditch was dammed. Restoration of ditches in sloping peatlands brought about more peat regrowth downslope of the restored ditch than further upslope. Our study demonstrates the potential for spatially distributed ecosystem‐scale models as tools to explore complex spatiotemporal responses to disturbance, and to support land managers in making decisions about peatland drainage and restoration.