Parched: Mexico's development depends on water--and foreign cash. (Infrastructure).

Mexico is drying up, and Environment Secretary Victor Lichtinger knows it. The accessible and friendly cabinet minister has even appeared on the TV show of comedian Adal Ramones to deliver a message: "Turn off the tap when you are brushing your teeth or shaving!"

While no environmentalist would criticize such an approach, creative as it is, more is needed. Approximately 12 million of Mexico's 100 million citizens have no running water at home. Some 26 million have no sewage service.

In the drought-stricken north, where industrial development has been strongest and population growth has spiked, 30 towns and cities only have water for a few hours a day. Meanwhile, many treatment plants built in the 1950s and 1960s are nearing the ends of their working lives. The problem is compounded by Mexico's widespread pollution. Almost three-quarters of the country's natural water reserves are contaminated to some degree, says Mexico's National Water Commission.

Solutions don't come cheap. The water agency estimates that Mexico's water infrastructure needs at least US$3 billion of investment per year for the next decade. Not surprisingly, Lichtinger has opened the sector to private investment on a massive scale.

In August, the government unveiled Promagua, a program of federal subsidies designed to attract private investment to water projects in 178 cities with populations exceeding 50,000 inhabitants. Under the program, local authorities can apply for subsidies of up to 65% of the cost of a specific project; the remainder is expected to come from investors.

Each municipality will negotiate its own deal and set up its own formula, covering everything from metering and billing to water treatment, pipes and the search for new sources of water. The federal government hopes the program will lure $1 billion in private cash per year for the next five years.

Although local government continues to play a role, Promagua in large part represents the virtual privatization of Mexico's water sector. "We should not frown on the search for new players in water administration," says Jesus Campos, head of the water commission's drinking water and sanitation unit. "We have to evolve."

The company likely to lead the charge into Mexican water will be giant French utility Ondeo, formerly Suez Lyonnaise des Eaux. It has had a presence in Mexico for a half-century and has pumped $300 million into municipal water projects over the last five years, a figure now likely to be dwarfed by its Promagua contracts.

Pump it up. Patrice Keime, president of Ondeo Degremont Mexico, the firm's residential arm, says projects will vary depending on local needs. In Baja California, where there is a dearth of fresh water and most communities live on the coast, desalination plants are a likely answer. "But the ultimate objective will always be the same wherever you are," says Keime, "to provide quality water on tap for each user 24 hours a day, 365 days a year."

The private-public partnership should also remedy Mexico's chronic lack of long-term infrastructure planning. "We want continuity:' says Campos. "In Mexico, unfortunately, the mayors change every three years. Every time they go, the head of the local water commission also goes."

Currently, Mexico's eligible cities are carrying out studies to prepare Promagua bids, a process likely to last for several months. Ondeo and its competitors, meanwhile, are readying themselves to ensure life's most basic resource to millions of Mexicans in the years to come.