The effect of energy forestry on water balance was quantified for a peat bog in central Sweden. An irrigated plantation containing a mixture ofSalve, BetulaandAlnuswas compared over a 3‐year period with a natural bog as a control area. The groundwater level and the soil water storage decreased in the cultivated area relative to the control area. Runoff during June‐August was generally higher in the cultivated area, mainly in response to irrigation and ditching, which altered runoff dynamics. In September the runoff rate at the cultivated area was lower, owing to the deeper groundwater level and to the larger soil water deficit that occurred prior to the autumn rains. At the cultivated area, about 30% more snow was trapped by the stems and the frost depth was 4 cm shallower. Exapotranspiration increased by 70 mm over the period June‐September compared with the undisturbed area.