Representatives of 148 countries approved the declaration on Wednesday at the end of a seven-day global water forum in Mexico City.
Four countries - Cuba, Bolivia, Venezuela and Uruguay - approved it with reservations, stating in a separate declaration that "access to water with quality, quantity and equity, constitutes a fundamental human right."
The statement described hydroelectric dams as "innovative practices" and "acknowledged the importance and implementation" of such projects, despite the criticism big dams have drawn from environmentalists for decades.
Diplomats close to negotiations on the document - released at the end of the 4th World Water Forum - said the dam clause had been inserted at the insistence of Turkey, a close US ally.
Turkish officials were not immediately available to comment on that version.
The most noteworthy omission was the lack of any reference to private investment in water.
The final statement from the 2003 Kyoto, Japan, water forum included pledges to "develop new mechanisms of public-private partnerships," and said that "all sources of financing, both public and private ... must be mobilised."
This year's declaration reflected anti-privatisation sentiments, which dominated the water forum, noting that "governments have the primary role in promoting improved access to safe drinking water".
Larger dams must be made more
Violent protests in countries including Bolivia and Guatemala have led private firms to withdraw from some contracts and to be more cautious about signing new ones.
On Wednesday in Nicaragua, about 2000 protesters marched through Managua to demand the government improve its water service, not privatise it.
Ernesto Cespedes, the director of global affairs for Mexico's Foreign Relations Ministry, said private investment was not mentioned for reasons of brevity, saying participating countries "wanted ... a short, non-repetitive declaration."
A statement from the four dissenting nations, said: "We declare a profound concern regarding the possible negative impacts that international instruments such as free trade and investment agreements can have on water resources and reaffirm the sovereign right of every country to regulate water and all its uses."
However, the anti-privatisation victory at the forum may be more apparent than real.
Private firms have vastly increased their sales of bottled water in the developing world in recent years, in what some see as a "stealth" privatisation of water services in countries where the tap water is unsafe.
Critics said there had been a resurgence of lobbying at the forum to promote dams, led in large part by the World Bank, whose representatives appeared unfailingly at panel discussions to advocate that all countries build a "minimum platform of water infrastructure."
Annan: More people need to have
access to safe drinking water
The pro-dam campaign argued that climate change will increase the need for dams.
Walter Erdelen, Unesco sub-director, said: "Many regions will likely need to increase water storage capacity in order to cope with climate change."
However, the UN World Water Development Report, also released on Wednesday recommends small dams instead of big ones - or at least making the larger projects more environmentally friendly.
In New York, Kofi Annan, the UN secretary-general, urged the forum's participants "to send a clear message to the world about the urgency" of reducing by half the number of people without regular access to safe drinking water and basic sanitation by 2015.
Every day, 6000 people, most of them children, die from water-related causes.
The UN water report recommended government reforms in water management, including better salaries for water officials and more controls on potential corruption.
The water-forum declaration recommended expanding water services to reduce poverty and considering carefully the environmental, social and economic impacts of water projects.