In a recently released report, “Watering the New Economy: Managing the impacts of the AI revolution,” GWI and Xylem provide insightful discussion around the impact of the AI revolution on global water resources, emphasizing the need for strategic water management and partnerships to address increasing water demand and ensure sustainable growth. See, https://www.globalwaterintel.com/documents/watering-the-new-economy to download the full report.
The rapid expansion of the AI-driven economy is reshaping industrial water demand, placing new pressures on already stressed water systems and underscoring the need for adaptive management. According to the report, in 2025, a 38% increase in water withdrawn by the new economy made up of data centers, chip fabs and power generation was seen since 2020. These activities still represent a relatively small share of overall industrial withdrawals. As with previous industrial shifts, effective water management will be critical to balancing innovation and economic growth with the reliability of water supplies for communities and ecosystems.
Looking ahead, the shift to a digital and AI-driven economy is expected to dramatically increase water demand across key enabling sectors. By 2050, the report notes that combined water use in data centers, semiconductor fabs, and power generation could rise by roughly 129%, with especially steep growth in semiconductor manufacturing and data center cooling. Semiconductor fabs are particularly vulnerable due to their reliance on large volumes of ultrapure water and their frequent location in water-scarce regions.
These trends underscore the need for coordinated water resilience strategies across the AI value chain. For semiconductors, this includes expanding onsite reuse, adopting advanced wastewater treatment, and moving toward full ultrapure water recycling. In data centers, improvements in cooling efficiency, greater use of direct liquid cooling, and collaboration with local utilities on reuse and reclamation projects are critical.
More broadly, partnerships between companies and communities, such as investments in wastewater reuse, leak reduction, and “net water positive” commitments offer a path to decoupling digital economic growth from freshwater withdrawals, ensuring water security for both industry and society.