As applying water demand management policies (WDMPs) can affect urban water infrastructures like wastewater systems from various aspects, this study proposes a novel approach to address the environmental impacts of applying WDMPs for the first time. Baharestan city, in Iran’s Isfahan province, is considered as a case study where various WDMPs, such as public awareness campaigns and water pressure management, are applied to confront water scarcity and to reduce water demand. To this end, the life cycle assessment (LCA) method is used to assess the environmental burdens of utilizing WDMPs in the operation stage of a real wastewater collection network (WWCN) and wastewater treatment plant (WWTP) under different WDMPs. A detailed inventory is considered, including detailed repairing of sewer pipelines and their maintenance, replacement of manhole covers, civil works, road rehabilitation, energy consumption, chemical usage, transportation, and air emissions of both the WWCN and WWTP, in various phases. The environmental assessment is conducted in SimaPro software using the ReCipe method. Based on results, a significant part of the environmental impacts accounts for energy consumption which has strong effects on most midpoint categories and has a great change in different scenarios. Besides, the results demonstrate that the environmental effects driven by the WWTP are eightfold the corresponding WWCN’s impacts. Overall, the outcomes from the present study revealed that implementing WDMPs can lead to diminishing environmental impacts. For instance, reducing wastewater production up to 68% can decrease 18% of the WDMPs’ environmental impacts of the wastewater system in the operation stage.