A dissolved air flotation (DAF) system upgrade was proposed for an urban paper mill to recycle effluent. To understand the influence of operating variables on the environmental impacts of greenhouse gas (GHG) emissions and water consumption, a dynamic supply chain model was linked with life cycle assessment (LCA) to produce an environmental inventory. Water is a critical natural resource, and understanding the environmental impacts of recycling water is paramount in continued development of sustainable supply chains involving water. The methodology used in this study bridged the gap between detailed process models and static LCA modeling so that operating variables beyond discrete scenario analysis could be investigated without creating unnecessarily complex models. The model performed well in evaluating environmental impacts. It was found that there was no single optimum operating regime for all environmental impacts. For a mill discharging 80 cubic meters of effluent per hour (m3/hour), GHGs could be minimized with a DAF capacity of 17.5 m3/hour, while water consumption could be minimized with a DAF capacity of 25 m3/hour, which allowed insight into where environmental trade-offs would occur. The study shows that more complexity can be achieved in supply chain modeling without requiring a full technical model. It also illustrates the need to consider multiple environmental impacts and highlights the trade-off of GHG emissions with water consumption in water recycling. The supply chain model used in this water treatment case study was able to identify the environmental trade-offs from the operating variables selected.