Investment theme: Tech, energy and industry Growing industrialization, bundled with regulatory shifts from other sectors, can have the unintended consequence of increasing demand for water. Examples are incentives to grow water-intense crops, urban greening and the expansion of water access, and the rise of energy and data centre requirements. Thermoelectric power generation – converting heat energy into electrical energy – accounts for over 41% of total US freshwater withdrawals.16 Additional water usage to cool the computer systems and data centres used by AI is expected to account for 1.1–1.7 trillion gallons of water by 2027, more than four to six times the total annual water withdrawal of Denmark.17 Given the lack of regulation on use- efficiency requirements, combined with several countries lowering water prices to companies to offer favourable water access, there is a high risk of uncontrolled water demand. Investment theme: Pollution Water pollution from agriculture, households and industrialization also threatens the freshwater supply. Increased usage of chemical fertilizers and pesticides and untreated wastewater is leading to both ground and surface water pollution.18 Recent high-profile coverage of water quality issues, such as the clean-up of the Seine river for the Paris Olympics in 2024, has led to heightened public awareness, driving increased efforts and policy responses to address these challenges.19 Investment theme: Climate resilience Climate change will also continue to affect the water cycle: glaciers are melting at an unprecedented speed and higher air temperatures cause both droughts and increased unprecedented flooding, both of which affect the natural recharge of groundwater resources. The Intergovernmental Panel on Climate Change (IPCC)s’s Sixth Assessment Report (AR6) confirms that increased levels of CO2 have already led to a rise in drought events, with each drought becoming more intense, as well as a surge in extreme rainfall events, which are themselves becoming more extreme.20 Due to growing demand, nature cannot replenish freshwater resources at the pace at which they are being withdrawn. Technological innovation and smart water management provide a vital pathway to manage future water demand while helping to sustain a healthy water cycle. Investing in water solutions today is not optional; it’s strategic foresight. Water futures and fit-for-purpose finance BOX 2 The Aquapreneur Innovation Initiative works in close collaboration with the Water Futures Community, the World Economic Forum’s multistakeholder platform that addresses the next generation of financial solutions to support water resilience. The community takes a systems-level approach to water challenges and encourages public–private collaboration to advance the global water agenda through collective dialogue, thought leadership and partnerships. The flagship report Water Futures: Mobilizing Multistakeholder Action for Resilience outlines five critical pathways for water resilience: 1. Holistic water valuation 2. Fit-for-purpose finance mechanisms 3. Sustained basin-level partnerships4. Adaptive water governance 5. Collaborative policy–innovation nexus Fit-for-purpose finance recognizes that the next generation of financing mechanisms must be designed to address a wide range of shocks and stresses – from an unpredictable climate to infrastructure maintenance – while enabling investment across diverse project types, from basin-level partnerships to breakthrough technologies, for the benefit of the entire hydrological cycle. The Water Futures community can play an important role in creating a greater understanding among different actors in critical areas such as fit- for-purpose financing and how policy can act as a critical enabler, or barrier, to water innovation. Investing in Water: Aligning Investment Strategies with Water Innovation 10

Investing in Water Aligning Investment Strategies with Water Innovation 2025