Analysis finds AI could add 30 trillion liters of annual water demand, but targeted reuse and digital infrastructure investments can substantially offset demand and protect communities

The rapid global expansion of artificial intelligence is set to drive a 129% increase in water demand across the AI value chain by 2050, according to new research by Xylem (NYSE: XYL) and Global Water Intelligence (GWI). Watering the New Economy: Managing the Impacts of the AI Revolution provides the most comprehensive assessment to date of how AI is reshaping global water use. It also highlights practical ways to meet that demand while strengthening water security for communities.

Spending on AI is forecast to approach $2 trillion in 2026,¹ accelerating infrastructure build-out worldwide. By the middle of the century, this expansion is projected to add 30 trillion liters of water demand, annually, fueled by a surge in power generation (~54% of the increase), semiconductor fabrication (~42%), and data center expansion (~4%).

Crucially, the report finds that this additional demand does not have to result in competition between industry and communities. Today, global water systems process roughly 320 trillion liters of wastewater each year and lose an estimated 100 trillion liters through aging infrastructure – volumes that, if recovered through targeted investment, could substantially offset AI’s projected growth in water use and reduce strain on freshwater resources.

The report calls for a coordinated “water transition” centered on water reuse, digital infrastructure, and cross-sector partnerships – to ensure water is a resilient foundation for economic growth, rather than a constraint on innovation.

“AI is placing new demands on water supplies, but many of the tools needed to address the challenge already exist,” said Matthew Pine, Xylem’s president and CEO. “Advanced treatment technologies, for example, allow us to recycle water rather than waste it. Digital systems can help better manage supply in real time, reducing water lost to leaks. It's time for a water transition built on targeted investment and collaboration between industry, utilities, and governments to ensure water systems can support both growth and community resilience.”

The analysis also highlights rising geographic risk. Nearly 40% of existing data centers are already located in regions experiencing high water stress,² and future growth is expected to concentrate in similarly constrained watersheds. This underscores the need for localized, basin-level solutions, even as global efficiency gains create headroom for growth.

“Our projections examine water use across the full AI value chain – from chip fabrication and data center operations to indirect demand from power generation – and assess how technology choices shape future demand,” said Christopher Gasson, CEO, Global Water Intelligence. “The greatest pressure points emerge in semiconductor manufacturing and in fast-growing data center hubs in the United States, East Asia, and South Asia. In these regions, expanded wastewater reuse, leakage reduction, and targeted infrastructure investment can fully offset future growth.”

The report points to early examples of how collaboration can deliver shared benefits. In Mexico, for example, utilities in Mexico City and Monterrey worked together with Amazon and Xylem on smart pipeline upgrades to reduce leaks. A system of sensors and advanced analytics will save more than 1.3 billion liters of water a year and help improve the reliability of water supplies for residents.

About Xylem

Xylem (XYL) is a Fortune 500 leading global water solutions company that empowers customers and communities to build a more water-secure world. Our 23,000 diverse employees delivered revenue of $8.6 billion in 2024, optimizing water and resource management with innovation and expertise. Join us at www.xylem.com and let’s solve water.

____________________________

¹ Gartner: AI spending >$2 trillion in 2026 driven by hyperscalers data center investments – IEEE ComSoc Technology Blog

² Beneath the surface: Water stress in data centers | S&P Global

View source version on businesswire.com: https://www.businesswire.com/news/home/20260114858723/en/