The effect on the environment of the establishment and operation of a sludge treatment reed bed system (STRB) is quite limited compared to mechanical sludge dewatering, with its accompanying use of energy and chemicals. The assessment presented here of the investment, operation and maintenance costs of a typical STRB, and of the related environmental impact, is based on the experiences gained from the operation of a large number of STRB in Denmark. There are differences in the environmental perspectives and costs involved in mechanical sludge dewatering and disposal on agricultural land compared to STRB. The two treatment methods were considered for comparison based on a treatment capacity of 550 tons of dry solids per year and with land application of the biosolids in Denmark. The initial capital cost for STRB is higher than a conventional mechanical system; however, an STRB would provide significant power and operating-cost savings, with a significant saving in the overall cost of the plant over 20–30 years. The assessment focuses on the use of chemicals, energy and greenhouse gas emissions and includes emptying, sludge residue quality and recycling. STRB with direct land application is the most cost-effective scenario and has the lowest environmental impact. A sludge strategy consisting of an STRB will be approximately DKK 536,894–647,636 cheaper per year than the option consisting of a new screw press or decanter.