FX168 Financial News Agency (North America) Morgan Stanley stated that the United States is facing serious water resource pressure, which may harm the world's largest economy and affect enterprise valuations. #AI Hot Trend#

According to the report "Future Resilience of U.S. Water Resources" released on Monday (October 28th) by JPMorgan and the sustainability consulting firm ERM, the water resources of the United States are already overloaded, and the rapid development of artificial intelligence further exacerbates this pressure.

Studies show that the growth of artificial intelligence (AI) requires a large amount of water for cooling data centers and semiconductor manufacturing that consume electricity, which clashes with the reality of climate change. As a result, the surge in demand conflicts with the unstable precipitation patterns, leading to a dangerous water shortage.

"AI and data centers are increasing the scale of challenges and also shining a spotlight on this issue," said Rama Variankaval, Global Corporate Advisor at JPMorgan, in an email comment to Bloomberg.

Large data centers can use up to 5 million gallons of water per day, roughly equivalent to the water used by a town of 0.05 million people. This does not include the billions of gallons of water needed to manufacture semiconductor chips.

The authors of the report stated that mishandling water risks could lead to a “true interruption of the global supply chain, especially the impact brought about by the rapid growth of artificial intelligence.” Water is “crucial” for semiconductor manufacturing and data center cooling operations, both of which are closely linked to artificial intelligence.

Research also found that more and more people are moving to warm and water-stressed regions like Arizona, as well as reintroducing manufacturing tasks that were previously outsourced to other countries back to the United States, exacerbating the water crisis in the USA.

JPMorgan and ERM stated that the impact of water on strategic decisions "may reach the extent of affecting enterprise valuations."

This development is forcing more and more investors to pay attention to how water scarcity affects their investment portfolios. The report points out that an increasing number of asset management companies and retirement funds consider water stress as a financial risk. The World Bank estimates that sustained pressure on water supply could lead to a maximum 6% decline in Gross Domestic Product (GDP) in certain regions.

Variancavarl stated: "The increasing scale of the challenge, the availability of a range of solutions applicable to different situations, and the public's attention to this issue are attracting various stakeholders, including investors, to focus on water resources issues."

JPMorgan and ERM believe that water represents a significant investment opportunity. They estimate that the water sector faces a public spending shortfall of $91 billion annually. Potential investment areas include flood prevention infrastructure, water treatment facilities, and new technologies. However, currently, private sector investment in water resources "only accounts for a small portion of the necessary funds."

A key obstacle remains in how to determine the appropriate monetary value. JPMorgan and ERM state that the market needs to price water, similar to the way many are attempting to price carbon dioxide.

They wrote that the current pricing in the USA "does not reflect the true value of water."