Water scarcity is becoming a global challenge to attempts to narrow the water demand– supply gap. To overcome this problem, it is sensible to consider alternative technologies that can exploit non-conventional water resources. The choice of such technologies should be, however, carefully analyzed, because any choice might be unfeasible from an economic point of view. In this work, a methodology to select the most appropriate non-conventional water resource, out of municipal wastewater and seawater, was proposed. Specifically, we attempted to determine which alternative provides cheaper water supply and production costs for domestic uses, depending on the wastewater treatment system used and the water plant capacity. The production of water under three scenarios was analyzed: (i) a city that has a conventional wastewater treatment plant (WWTP); (ii) a city that uses primary treatment and submarine outfalls to treat municipal wastewater; (iii) seawater desalination. The proposed methodology was tested in Chilean cities that are located in areas where water is a scarce resource. The results showed that the reuse of municipal wastewater represents a cost-competitive alternative to seawater desalination, mainly when municipal wastewater is treated in a conventional WWTP and when water flow demand is higher than 1500 m3/d. In contrast, seawater desalination becomes more profitable than wastewater reuse when the treatment of municipal wastewater is based on the use of submarine outfalls. This study provides a useful economic tool for promoting municipal wastewater reuse as a non-conventional water source for supplying water to cities that suffer from water scarcity in Chile and in similar areas of the world.