Both centralized and decentralized wastewater systems have distinct engineering, financial and societal benefits. This paper presents a framework for analyzing the environmental effects of decentralized wastewater systems and an evaluation of the environmental impacts associated with two currently operating systems in California, one centralized and one decentralized. A comparison of energy use, greenhouse gas emissions and criteria air pollutants from the systems shows that the scale economies of the centralized plant help lower the environmental burden to less than a fifth of that of the decentralized utility for the same volume treated. The energy and emission burdens of the decentralized plant are reduced when accounting for high-yield wastewater reuse if it supplants an energy-intensive water supply like a desalination one. The centralized facility also reduces greenhouse gases by flaring methane generated during the treatment process, while methane is directly emitted from the decentralized system. The results are compelling enough to indicate that the life-cycle environmental impacts of decentralized designs should be carefully evaluated as part of the design process.