Aquifers are underground porous formations containing water. Confined aquifers are surrounded by impermeable layers on top and bottom, called cap rocks and bed rocks. A confined aquifer with a very low groundwater flow velocity was considered to meet the annual cooling and heating energy requirements of a residential building complex in Tehran, Iran. Four different alternatives of aquifer thermal energy storage (ATES) were employed to meet the heating/cooling demands of the buildings. These alternatives were: using ATES for cooling alone, for heating alone by coupling with flat plate solar collectors and for cooling and heating by coupling with a heat pump. For the economic evaluation of the alternatives, a life cycle cost analysis was employed. For the environmental evaluation, Ret Screen software was employed. For the three considered operational alternatives, using ATES for cooling alone had the minimum payback period time of 2.41 year and the life cycle cost of 16000$. In the environmental consideration of the three alternatives, coupling of ATES with heat pump for cooling and heating had the minimum CO2 generation, corresponding to 359 tons/year.