The model structure is extended by introducing capital stocks with innovation properties for the water production and distribution sector and for the wastewater collection and treatment sectors. Besides water saving strategies and wastewater collection rate improvements, the increase in the energy efficiency will also be connected to the development of these capital stocks. The development of the capital stocks for the different sectors depends on the development path for producing the quantities of the desired consumption good. These are mainly determined by the optimality conditions under the model constraints. In particular, for the water infrastructure model, there is a need to reduce the number of flow and stock variables. This is achieved using a substitution strategy in advance. Otherwise, determining model constraints and the derivation of optimality conditions becomes a complicated procedure.