I am perfectly happy to let the chips fall where they may but at the outset I am curious why it is "more green" to have, say, an on-site sewage-teatment system that one which is community- or even region-wide? That's implicit in "living building" philosophy. But where are the numbers? On what basis do we assume or state that it is better?
I can concede that using natural rainfall for use on site makes sense. Or that treating storm-water run-off on-site makes sense ecologically. (It can also be a cheaper, too.)
But there are economies of scale in many human activities and I would expect to see them in waste-treatment as well.
There's another element. It would seem that the living buildings goal would limit the size of buildings. If you are going to rely on natural rainfall to supply drinking water for an apartment building, that would limit the number of apartments you can handle on a site or encourage spreading out ("sprawling") over larger areas.
It might work and be effective but color me skeptical at this point.