Detailed 3D environment models for visualization and computer based analyses are important in many defence and homeland security applications, e.g. crisis management, mission planning and rehearsal, damage assessment, etc. The high resolution data from airborne laser radar systems for 3D sensing provide an excellent source of data for obtaining the information needed for many of these models. To utilise the 3D data provided by the laser radar systems however, efficient methods for data processing and environment model construction needs to be developed. In this paper we will present some results on the development of laser data processing methods, including methods for data classification, bare earth extraction, 3D-reconstruction of buildings, and identification of single trees and estimation of their position, height, canopy size and species. We will also show how the results can be used for the construction of detailed 3D environment models for military modelling and simulation applications. The methods use data from discrete return airborne laser radar systems and digital cameras.