The decentralized treatment of wastes is studied for an urban scenario considering a high-density population of 2500 inhab./km2. Food and garden waste were assumed to be treated in a co-digestion configuration using several mid-size digesters. In contrast biogas and digestate valorization were carried out in a centralized manner. Electricity and thermal energy were produced from this configuration, accounting for 1.3% of residential electricity demand and 3.2% of thermal demand when using double-turbocharged engines. However, the location of the treatment plants is a factor that may raise social discomfort. Rejection of locating the plant in specific sites close to residential neighbors, nuisance due to possible odor and gaseous emissions, and house market distortions are just a few of a long list of problematic aspects that may threaten the decentralized alternative. These factors are of great relevance and must be given a practical solution if the circular economic model is to be implemented by considering the insertion of waste streams into the production system and generating local energy sources and raw materials.