Membrane processes are increasingly being considered as an alternative to conventional water and waste water treatment methods in anticipation of future demands for high standards and reduced environmental impact. However, the use of membranes for these applications is currently limited by the high capital and operating costs with which they are associated. This paper looks at the economics of membrane processes for water and waste water applications. The results of extensive pilot plant trials have been used to determine the cost of treatment using a range of ultrafiltration and microfiltration membranes. The most significant factors influencing the overall cost were found to be membrane cost, membrane replacement frequency and power. The importance of selecting the most suitable membrane and optimum operating conditions for each application is demonstrated. A comparison has been made between the costs of membrane systems and conventional treatment processes. Some application areas have been identified where membranes are cost-effective.