1. JPMorgan's report states that the artificial intelligence wave may bring not only an 'electrical shortage,' but also a 'water shortage'; 2. The AI industry requires a large amount of water to cool data centers and semiconductor manufacturing equipment: a large data center can use up to 5 million gallons of water per day, roughly equivalent to the daily water consumption of a town with over 0.05 million people, and manufacturing semiconductor chips also requires billions of gallons of water.
Finance Association News on October 29 (Editor Liu Rui) In the context of the booming development of artificial intelligence, the huge demand for electricity brought by the artificial intelligence industry has become one of the hot topics on Wall Street.
Now, JPMorgan has released a report stating that the crisis brought by the artificial intelligence wave may be not only an 'electrical shortage,' but also a 'water shortage.'
AI will bring a huge water supply pressure.
On Monday, Eastern Time, JPMorgan's report stated that the United States is facing serious water supply pressure, which could damage the economic outlook of the USA and erode enterprise valuations.
JPMorgan and the sustainable development consulting firm ERM have released a report titled 'The Future of water Resilience in US.' The report states that the vigorous development of artificial intelligence has further exacerbated the tension of water resources in the USA.
This is because the AI industry requires a large amount of water to cool data centers and semiconductor manufacturing equipment: a large data center can use up to 5 million gallons of water per day, roughly equivalent to the daily water consumption of a town with over 0.05 million people. In addition, manufacturing semiconductor chips also requires billions of gallons of water.
Research by JPMorgan shows that the development of artificial intelligence conflicts with the reality of climate change, resulting in a sharp increase in water demand conflicting with unreliable precipitation patterns, which may lead to water scarcity.
Rama Variankaval, the global head of JPMorgan's corporate consultancy and the main author of the report, wrote: "Artificial intelligence and datacenters are scaling up, but they are also drawing attention to this issue."
The authors of the report wrote that improper handling of water resources could "truly disrupt global supply chains, especially considering the impact of the rapid development of artificial intelligence." Water is "essential" for semiconductor manufacturing and datacenter cooling operations, which are two "key business activities related to artificial intelligence."
Research has also found that the increasing migration of people to water-scarce areas like Arizona and the trend of manufacturing reshoring are exacerbating the water crisis in the USA.
Water scarcity could even threaten corporate valuations.
JPMorgan and ERM believe that water resources' "impact on strategic decisions may reach the level of affecting corporate valuations." This development is forcing more and more investors to pay attention to the impact of water scarcity on their investment portfolios.
The report points out that an increasing number of asset management companies and retirement funds are recognizing water stress as a financial risk. The World Bank estimates that sustained pressure on water supply could lead to a GDP decline of up to 6% in some regions globally.
Furthermore, JPMorgan and ERM point out that this also means water resources represent a massive investment opportunity. They estimate an annual $91 billion public spending gap in the water resources industry, with potential investment areas including flood prevention infrastructure, water treatment facilities, and new technologies. However, currently, private investments in water resources "only make up a small fraction of the necessary funds."
In this context, JPMorgan and ERM state that the market needs to price water, much like many are now attempting to price carbon dioxide.
Editor / jayden
