The waste hierarchy is being widely discussed these days, not only by cost-benefit analysts, but a growing number of life cycle assessments (LCA) have also begun to question it. In this article, we investigate the handling of waste paper in Denmark and compare the present situation with scenarios of more waste being recycled, incinerated or consigned to landfill. The investigations are made in accordance with ISO 14040-43 and based on the newly launched methodology of consequential LCA and following the recent guidelines of the European Centre on Waste and Material Flows. The LCA concerns the Danish consumption of paper in 1999, totalling 1.2 million tons. The results of the investigation indicate that the waste hierarchy is reliable; from an environmental point of view recycling of paper is better than incineration and landfilling. For incineration, the reason for the advantage of landfilling mainly comes from the substitution of fossil fuels, when incinerators provide heat and electricity. For recycling, the advantage is related to the saved wood resources, which can be used for generating energy from wood, i.e., from renewable fuel which does not contribute to global warming.