This paper proposes an optimization framework to simultaneously optimize the saline and freshwater water sources as well as decentralized renewable and conventional energy sources, which consequently results in an economic and efficient water-energy system operation. The inextricable links between water and energy systems are taken into considerations, and a mixed integer nonlinear programming formulation is used to solve the proposed optimization model. A hybrid electrodialysis-reverse osmosis is integrated in the water distribution system and its electricity consumption is minimized. Also, the dayahead economic dispatch problem of the energy system incorporates the random behavior of solar and wind generation units, along with charging and discharging modes of battery storage systems. The outcomes of the proposed models highlight: 1) integrating the hybrid desalination module in the waterenergy system will reduce peak demands by more than 30% if the water and energy systems are solely supplied by saline water and renewable energy sources, respectively; 2) presence of an extra water storage tank also decreases peak demands by 13%. The impact of key elements of the combined system such as pumps' speeds, water tank constraints, and presence of renewable sources on the output cost, generated energy, and hydraulic parameters is investigated through case studies. (c) 2020 Elsevier Ltd. All rights reserved.