The demand for desalinated water could most easily be met by seawater desalination. However, this option imposes a heavy economic burden, and furthermore it is not the most adequate solution from an environmental point of view. In this paper the environment and cost impact of replacing seawater desalination capacity by desalination of marginal water sources is analyzed. The techno-economic analysis is made for the projected demand of Israel, the PNA and Jordan, demonstrating the beneficial cost and environmental impact of supplying a part of the needed water supply by desalination of marginal brackish sources including wastewater. Apart for evaluation of the general effect on long-range regional development case studies of supply of desalinated seawater vs. desalination of marginal brackish water source in the vicinity of the Dead Sea are presented.