South Africa is a semi-arid developing country facing water and energy insecurity. There are colossal challenges in reliably providing these resources amid growing population, increased urbanization and improved living standards causing increased demand for these resources. Development of new supply centralized systems comes at an exorbitant cost, whereas decentralized systems are touted as an attractive alternative. Grey water recycling and rain water harvesting at buildings level is such an alternative that can provide water for non-potable uses. However, there are technological challenges of optimally operating such systems while ensuring efficient use of associated energy. This paper introduces two control strategies; open loop optimal control and closed-loop model predictive control (MPC) strategies aimed at ensuring safe and reliable operation of the grey water recycling and rain water harvesting system while efficiently using associated energy. From the case study, the proposed system with either control strategy can save the cost of water and waste water by up to 32.3% and 29.5% respectively, while leading to 35.7% in energy cost savings and 31.5% in total operational cost savings in a month. Adoption of these systems would have a huge environmental effect in reducing demand for sewerage services, conservation of water hence reducing demand for potable water as well as increasing the energy efficiency. Furthermore, the system would increase the reliability and security of water supply. Despite the benefits, the system does not pay within its lifetime and therefore, government intervention is required so as to make it economically attractive. High cost of implementation coupled with low potable and waste water tariffs harbour adoption of these systems. Appropriate regulations, policies, incentives and public education are necessary to support such novel technologies in ensuring resource conservation, efficiency and security are achieved.