Mexico's environment ministry (Semarnat) will establish a new law to reduce water waste, modify prices that reflect the resource's true value, and implement remediation works, the ministry announced.
Some 60% of current water supply is wasted, the statement added, and wastewater treatment is currently at 20% coverage.
Annual investments reach 33bn pesos (US$3.1bn) in drinking water, sewerage and wastewater works.
Without remediation, the Federal District will have to treat by 2010 some 300 cu. m/second of wastewater, or four times the current rate.
The formation of a law is part of the national water authority's (CNA) waterworks sector modernization program Promagua.
Promagua is a federal subsidies program designed to attract private investment to water projects in cities greater than 50,000 inhabitants. Under the program, local authorities can apply for subsidies of up to 70% of the cost of a specific project. The remainder is expected to come from investors.
During the three semesters Promagua has been launched, subsidies have totaled 1.2bn pesos (US$114mn).