This paper explores the impact of erosion and restoration measures on habitat development and on wave damping by a small salt marsh nestled alongside a dike on the Wadden island of Terschelling. The aim is to advance knowledge about the benefits and possible side-effects of salt-marsh restoration. Analysis of a time series of aerial photographs from 1944 to 2010 indicates that the salt marsh decreased steadily in size after maintenance of accretion works was terminated. In the western part of the marsh, which is accessible to sheep, vegetation is low (5–15 cm) and dominated by Salicornia europaea and by Spartina anglica. In the most intensively grazed parts, vegetation is very scarce. The eastern, inaccessible part of the salt marsh is covered by dense patches of the shrubby perennial Atriplex portulacoides and Spartina anglica (15–25 cm in height). SWAN wave models show that wave height at this location is significantly affected by the areal extent of the salt marsh as well as by the vegetation. High or dense vegetation are in the models nearly as effective in damping waves (with an initial height of 0.15 and 0.5 m) as widening the salt-marsh area by 350 m. A low density of low plants, as observed in the grazed part of the marsh, has almost no wave-damping effect. Even under conditions of sea level rise, a broader salt marsh vegetated with high plants significantly affects modelled wave height. Therefore, salt-marsh restoration is an adaptation measure worth exploring, though an array of effect types must be considered.