In recent decades, China has been facing serious water pollution crises. To address this problem, discharge standards for wastewater treatment plants in China are becoming more and more stringent. Also, the sewage charge for compliant emissions and the penalty rate for non-compliant emissions have increased significantly. This paper comprehensively investigates the economic and environmental implications of such wastewater management policy in China. In this paper, a general framework for the analysis of WWTPs' behavior and the resulted economic and environmental consequences is presented, and the impacts of discharge standard, charge rate, and penalty rate are analyzed. The trade-offs-between the operational cost, environmental impact, and pollutant emissions are identified. This study also provides some insightful management implications for concerned policy makers. (C) 2016 Elsevier Ltd. All rights reserved.