Sludge is slowly moving away from providing basic by-products and towards providing value-added products (e.g. fertilisers); therefore, it is no longer perceived as waste but as a product. Consequently, wastewater treatment plants become multifunctional systems that produce two coproducts that are given a second life: sludge and “clean” water. An allocation factor in Life Cycle Assessment can partition environmental burdens of wastewater treatment between these two products, but doing so remains highly challenging. To address this challenge, we followed a four-step procedure to develop an allocation factor using a mesoscopic approach and process- and product-related parameters in a mathematical model. The first two steps consisted of determining and mathematically representing process- and product-related parameters and their associations to define a global allocation factor. The third step consisted of constructing a corrective inventory matrix to adjust the global allocation factor, since inventory flows can be specific to certain processes. The last step consisted of mathematical modelling of the final corrected allocation factor. Based on the parameters chosen, the global allocation factor equalled 45% for sludge and 55% for water. A sensitivity analysis was performed to assess the robustness of the sludge allocation factor, which varied from 39 to 49%. The allocation factor developed reflects technological performances of the system and considers environmental impacts of sludge production to assess environmental impacts of value-added sludge-based products.