This World Oceans Day, as we celebrate the life-giving force of our seas, we must remember that ocean health begins on land. It starts with how we manage every drop of freshwater that eventually flows into our seas. Healthy oceans depend on responsible water management upstream, from taps and treatment plants to industrial cooling towers.

Increasingly, a surprising force is highlighting this critical link: the artificial intelligence (AI) revolution. Data centers, the physical backbone of AI, are projected to consume billions of gallons of water annually for cooling and power generation. This immense demand has thrown a harsh but necessary spotlight on the silent stewards of our water cycle — the water utility companies that clean, distribute, and recycle our most precious resource. 

As investors track the surge in AI infrastructure, many are now turning their attention to water utilities and water technology firms that enable this digital age, putting a bright spotlight on exchange-traded funds (ETFs) that hold them.

Before identifying these ETFs, one must understand the connection between AI-driven water demand and ocean preservation, which is precisely where blue economy principles intersect with the financial mainstream.

The Critical Role of Water Companies in the AI & Blue Economy

High-density AI chips require massive cooling, with 75% to 90% of large-scale data centers relying on water-based systems. When data centers over-abstract millions of gallons daily from watersheds, river flows drop, causing saltwater to destroy coastal marine nurseries downstream. Furthermore, discharging untreated, hot cooling water into rivers fuels toxic algal blooms.

This is where water companies — largely divided into two categories, distributors and technology enablers — serve as the ultimate upstream safeguard for the Blue Economy.

With a substantial share of the water used by LLM data centers coming from potable municipal sources, hyperscalers are increasingly collaborating with water utilities and technology enablers to develop wastewater recycling and reuse solutions.

For example, Essential Utilities (WTRG Quick QuoteWTRG - Free Report) committed to investing $26 million in 2025 to design, build and operate a state-of-the-art water treatment facility capable of processing 18 million gallons per day. The facility is being developed specifically to support a 1,400-acre hyperscale data center campus and its associated power-generation requirements in Pennsylvania.

On the other hand, Xylem Inc. (XYL Quick QuoteXYL - Free Report) , an innovative water solutions provider, in collaboration with Amazon (AMZN Quick QuoteAMZN - Free Report) , has been deploying Xylem Vue, an advanced software platform that applies data and analytics to detect leaks, cut water losses and improve residents’ water supply in Mexico. These smart water upgrades are expected to save more than 1.3 billion liters annually in Mexico.

Similarly, Ecolab (ECL Quick QuoteECL - Free Report) , a global provider of water treatment solutions, offers AI-optimized water management software that helps data centers reduce cooling water usage by up to 40%, directly lowering their operational risk. 

These examples demonstrate how AI infrastructure can expand responsibly while enhancing water security, creating opportunities for water companies to benefit financially from the trend.

Forward Looking Outlook

Looking ahead, a study by Cornell University estimates that, globally, AI could use up to 6.6 billion cubic meters of water by 2027, the equivalent of nearly two-thirds of England’s entire annual public water consumption.

While companies around the world are being encouraged to design systems that minimize water consumption, existing water resource plans largely fail to account for the rapid expansion of AI data centers. This has created a widening gap between the growing water demands of LLM data centers and the pace at which water-saving technologies are being developed and deployed.

The result? Environmental pressure to conserve ocean-bound freshwater now aligns perfectly with the financial imperative of AI companies to secure reliable, cheap water. 

This merger of motives is supercharging the prospects for water firms, and the ETFs holding them, making them a resilient defensive play within the volatile tech ecosystem.

4 Water ETFs for Your Watchlist

For investors, the simplest way to gain exposure to the growth trend offered by the companies mentioned above is through water-focused ETFs. As AI’s thirst for water grows, these water funds offer a way to invest in the essential infrastructure that protects both our oceans and digital future.

Consider adding these to your watchlist:

Invesco Water Resources ETF (PHO Quick QuotePHO - Free Report)

This fund, with a market value worth $1.99 billion, offers exposure to 37 companies that create products designed to conserve and purify water for homes, businesses, and industries. Waters Corp. holds the first spot in this fund, with 10.01% weightage. 

ECL holds the fourth position in this fund, with 7.32% weightage, while XLY holds the 10th spot with 3.73% weightage. The fund charges 59 basis points (bps) as fees. 

First Trust Water ETF (FIW Quick QuoteFIW - Free Report)

This fund, with total net assets worth $1.77 billion, offers exposure to 36 companies that derive a substantial portion of their revenues from the potable and wastewater industry. Waters Corp. holds the first spot in this fund, with 4.98% weightage. 

The fund charges 50 bps as fees. 

Invesco S&P Global Water Index ETF (CGW Quick QuoteCGW - Free Report)

This fund, with a market value worth $994.8 million, offers exposure to 68 water utilities, infrastructure, equipment, instruments and materials companies. American Water Works holds the first spot in this fund, with 7.70% weightage, while XLY holds the second spot with 7.27% weightage.  

WTRG holds the fourth position in this fund, with 5.86% weightage, while ECL holds the eighth spot with 3.98% weightage. The fund charges 58 bps as fees. 

Global X Clean Water ETF (AQWA Quick QuoteAQWA - Free Report)

This fund, with total net assets worth $22.9 million, offers exposure to 40 companies advancing the provision of clean water through industrial water treatment, storage, and distribution infrastructure, as well as purification and efficiency strategies, among other activities. American Water Works holds the first spot in this fund, with 8.22% weightage. 

XYL holds the third position in this fund, with 7.59% weightage, while WTRG holds the seventh spot with 4.73% weightage. The fund charges 50 bps as fees.