There is a trend towards decentralized source separation (DSS) for wastewater treatment and resource recovery. An assessment framework is required to assess whether implementing a DSS treatment over a conventional centralized one is advantageous. This framework needs to account for the performance of the wastewater treatment plant (WWTP) and the effect that resource recovery has on closely-linked sectors such as food and energy production. A framework is lacking that covers the economic dimension, the circularity, the nature reciprocity of resource recovery and that can be applied to real-life cases. A novel WFE framework has been developed here to compare a conventional centralized and a DSS-based WWTP. This novel WFE framework contains assessment methods that are reproducible, and applicable to real-life cases. It also accounts for the local climatic conditions that determine irrigation water requirements. The comparison results revealed that the need to construct new DSS infrastructure leads to a lower economic efficiency of water treatment. Further, chemical-intensive treatment reduces the DSS's material resource circularity and efficiency. Using heat pumps increases the energy use of the DSS WWTP, causing a reduction in water treatment energy efficiency. However, the advantages of DSS show up in the freshwater and nutrient efficiency of food production as well as in the energy self-sufficiency of the WWTP. The novel WFE framework contains indicators specific to water treatment and the food production sectors to improve inter-sectoral communication. Also, including the nature reciprocity assessment can help demonstrate the issue with treated wastewater discharge, especially in arid regions with low stream flows. It can potentially help improve the acceptance of treated wastewater-based reuse. To conclude, the novel framework helps to assess real-life case studies in a more integrated and holistic way. It can help make decisions related to decentralization and source separation by simultaneously considering the water treatment, energy production, and food production sectors.