Connection to centralised regional sewage systems has been too expensive for small-dispersed communities, and these townships have traditionally been serviced by on-site septic tank systems. The conventional on-site system in Australia has consisted of an anaerobic holding tank followed by adsorption trenches. This technique relies heavily on the uptake of nutrients by plants for effective removal of nitrogen and phosphorus from the effluent, and is very seasonal in its efficiency. Hence, as these small communities have grown in size, the environmental effects of the septic tank discharges have become a problem. In locations throughout Australia, such as rural Victoria and along the Hawkesbury-Nepean River, septic tanks as being replaced with the transport of sewage to regional treatment plants. For some isolated communities, this can mean spending 20,000 dollars-40,000 dollars/household, as opposed to more common connection prices of 7,000 dollars/household. This paper explores some alternative options that might be suitable for these small communities, and attempts to identify solutions that provide acceptable environmental outcomes at lower cost. The types of alternative systems that are assessed in the paper include local treatment systems, separate blackwater and greywater collection and treatment systems both with and without non-potable water recycling, a small township scale treatment plant compared to either existing septic tank systems or pumping to a remote regional treatment facility. The work demonstrated the benefits of a scenario analysis approach for the assessment of a range of alternative systems. It demonstrated that some of the alternatives systems can achieve better than 90% reductions in the discharge of nutrients to the environment at significantly lower cost than removing the wastewater to a remote regional treatment plant. These concepts allow wastewater to be retained within a community allowing for local reuse of treated effluent.