Life cycle assessment (LCA) allows evaluating the potential environmental impacts of a product or a service in relation to its function and over its life cycle. In past LCAs applied to wastewater treatment plants (WWTPs), the system function definition has received little attention despite its great importance. This has led to some limitations in LCA results interpretation. A new methodology to perform LCA on WWTPs is proposed to avoid those limitations. It is based on net environmental benefit (NEB) evaluation and requires assessing the potential impact of releasing wastewater without and with treatment besides assessing the impact of the WWTP's life cycle. The NEB allows showing the environmental trade-offs between avoided impact due to wastewater treatment and induced impact by the WWTP's life cycle. NEB is compared with a standard LCA through the case study of a small municipal WWTP consisting of facultative aerated lagoons. The NEB and standard LCA show similar results for impact categories solely related to the WWTP's life cycle but differ in categories where wastewater treatment environmental benefit is accounted for as NEB considers influent wastewater quality whereas standard LCA does not.