The EU is considering funding projects in North Africa and along the eastern coast of the Mediterranean in an effort to tackle rising pollution levels.
The European Commission and European Investment Bank have been looking at the pollution hotspots which impact on the sea as a whole and are now looking at how money might be used to address the problem.
According to the study published by the two organisations, the environmental decline in the Mediterranean threatens the health of all people living along the shore line - almost 150 million of them in all.
As well as the environmental and health issues, falling water quality also has a financial impact on sectors such as fishing and tourism.
The proposed Mediterranean Hot Spot Investment Programme is part of the EC's wider Horizon 2020 initiative designed to tackle all the major sources of pollution in the sea by 2020.
European Environment Commissioner Stavros Dimas said: "It is imperative that the European Union work with its Mediterranean neighbours to safeguard the environment of one of the world's major seas.
"We must all cooperate to provide the appropriate resources to reserve the degradation of the Mediterranean."
More than half of urban areas on the Mediterranean with a population over 100,000 do not have waste water treatment plants and 60% of the wastewater produced in these areas is directly discharged into the sea.
More than 80% of landfills in southern and eastern Mediterranean countries are not monitored. The marine environment of the Mediterranean is especially exposed to agricultural waste, airborne particles and river run-off, which carries disease, heavy metals, organic pollutants, oils and radioactive substances into the sea.
Rapid urbanisation coupled with increasing and unsustainable development of tourism in the Mediterranean Sea's coast has contributed to significant environmental and health problems.
Pollution from industry, shipping and households, the loss of open areas, and the destruction of coastal ecosystems for construction projects are also taking their toll.
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