ABSTRACT.This research examines the impact of high rates of interest upon the least cost system design for urban drainage systems when water quality is a critical parameter. Results of examination of twelve alternative system designs in a case study watershed indicate the least cost study design is highly sensitive to the rate of interest, but not sensitive to the water quality parameters. When the high rates of interest currently prevalent are introduced into the model those systems which contain open channel collection components are selected as the least cost system. At low rates of interest pipeline collection components are selected as the least cost system. Holding pond components of system design are cost effective at several levels of water quality. They are neutral to the rate of interest so they are incorporated in least cost systems at all the levels of interest rates. The results of the study indicate that at the current high rates of interest open channel collection systems and holding ponds are cost effective system components to achieve selected levels of water quality in urban drainage system design.