Direct potable reuse (i.e. treated wastewater directly reused
for drinking water) is very rare because of the increased potential
risk to public health and the negative public perception. Even
though the technology is well proven, direct potable reuse is only
justifiable when there is no other option for example in the desert
or outer space. Currently the only place where direct potable reuse
takes place on a municipal scale is in Windhoek, Namibia where
treated wastewater combined with surface runoff is treated to
provide potable water. Direct reuse is common practice for non
potable applications in industry and irrigation.
Indirect potable reuse can be planned or unplanned. Conventional
water treatment in many countries involves unplanned indirect
potable reuse of treated wastewater. That is, water abstracted from
rivers to provide drinking water includes treated wastewater that
has been discharged upstream. It is unplanned in the sense that it
is not an intentional part of the wastewater discharge policy that
the water will be reused downstream for potable water supply. The
abstracted water will still need to meet potable water standards if
it is to suply drinking water. River water may go through several
abstraction-treatment-use-treatment-discharge cycles before
reaching the sea (see Figure 1). The pursuit of economies of scale
has led to a tendency for large down-catchment wastewater treatment
plants. Planned use by relocating treatment and shortening the
use-reuse cylce could increase water availability for both
environmental and other purposes.
Figure 1. Indirect Water Reuse

Health
The reason that indirect water reuse is not considered to pose a
health risk is that that the treated wastewater benefits from
natural treatment from storage in surface water and aquifers and is
diluted with 'ordinary' river/ground water before abstraction to
ensure good drinking water quality (part of a multi barrier
approach in the water safety plan). The storage time provides a
valuable buffer to measure and control quality. Direct potable
reuse, however, is almost a closed loop system with limited storage
and a shorter buffer time therefore increasing the risk.
Case Studies
Read about planned indirect potable water reuse
in Germany and Singapore.