The most widely used approaches for handling of combined sewer overflows (CSOs) are: (1) storage in smaller retention basins and local decentralised treatment; and (2) storage in larger retention basins and treatment at a central wastewater treatment plant. This paper compares the environmental impact including carbon footprint for these two approaches using the life cycle assessment (LCA) method, and provides a holistic view of how CSO is to be treated considering technical, economic and environmental issues. The analysis is based on the results of the EU-financed LotWater project and 9 years of operational data from wastewater treatment in Copenhagen. All technologies are analysed for handling of 1 m3 of CSO. However, costs are compared based on cost per reduced area. The study showed that decentralised treatment of CSO is the cheapest method and the power consumption for the decentralised treatment is five times less than that for central treatment of CSO. However, central treatment of CSO appeared to be most efficient in reducing discharge of nutrients and environmental toxics. The LCA showed that the largest environmental impacts from handling CSOs are eutrophication and aquatic ecotoxicity. This study concludes that focusing on global warming alone in the form of reduced energy consumption could result in negative impacts on recipient waters.