The World Bank signed an agreement Tuesday to provide Mexico with up to $1.8 billion in loans for environmental purposes.

The loans, which are expected to be matched by funds from both the private sector and the U.S. and Mexican governments, will generate as much as $4 billion for Mexican environmental programs, the World Bank estimates.Those programs, it said, will primarily address environmental pollution along the U.S.-Mexican border but also go for cleanup efforts in other parts of Mexico.

The World Bank financing package is partly meant to reassure environmentalists who fear that the North American free-trade agreement, due to be implemented Jan. 1, will adversely affect U.S.-Mexican border conditions. Some U.S. environmental groups have opposed Nafta because of that fear.

Treasury Secretary Lloyd Bentsen said that he expects the World Bank loan package, to be disbursed over three years, will be "the first of . . . a long series of actions strengthening environmental protection in Mexico."

It will serve as "an important complement" to Nafta, he said. The U.S. and Mexican governments, he noted, are still discussing other financing to help the environment on both sides of their 2,000-mile-long border.

One proposal reportedly still under study would establish a $5 billion environmental fund, financed equally by the United States and Mexico, to be administered by the Inter-American Development Bank.

One of the first projects under the Mexican agreement, the World Bank said, will improve water supplies and sanitation as well as build new solid waste disposal facilities for 14 border cities. It will total $700 million, half financed by the bank and half by Mexico.

Another loan, for other areas in Mexico, will help improve water supply and

wastewater treatment, the bank said. Yet other loans, it said, will help Mexico conserve its natural resources, ensure biodiversity and control toxic waste. "On both environmental and economic grounds, there is no time to lose," it said.