3 trends defining water innovation in 2025 and what they mean for the global water agenda in 2026

2025 is defined by economic friction and technological acceleration, as trade tariffs, geopolitical volatility and an AI boom reshape global industries. Amid these shifts, water innovation moved from the periphery to the mainstream of climate and sustainability discussions.

New water-focused venture funds, Burnt Island Ventures in the US and Emerald Technology Ventures in Europe, signal rising investor confidence. Yet, despite this enthusiasm, traditional water-infrastructure financing continues to lag. The OECD and World Bank estimate global needs will reach $6.7 trillion by 2030 and could rise to $22 trillion by 2050, far exceeding current public funding commitments. At the same time, the absorption capacity for these funds remains an issue, with over a quarter of funding not being deployed.

This challenge sits within a broader transformation taking shape in 2025: water is now central to business strategy, regulatory action and the structure of the water technology market.

Corporate water stewardship has long been led by food and beverage manufacturers, such as Nestlé, PepsiCo, and Unilever, where water efficiency and watershed restoration remain essential to supply-chain resilience. Rising water stress and supply-chain disruption mean companies across many sectors must consider water in their long-term planning.

The tech sector has become a focal point with tech companies facing growing scrutiny over the energy and water footprint of AI and cloud data centres. Reports revealed that Microsoft’s global water consumption rose by 34% in 2022, driven by AI model training. In 2025, Salesforce published its first comprehensive water programme, under its Nature Positive Strategy. The plan identifies water as the company’s most significant nature-related challenge and highlights two risks in particular: the impact of data-centre operations on freshwater supplies and the potential for water scarcity to affect financial performance. Salesforce has installed Epic Cleantec’s on-site water reuse system at Salesforce Tower in San Francisco, supporting the city’s push to expand non-residential reuse and positioning the company among the early adopters (alongside Microsoft and AWS) of practical solutions to reduce water impact and operational risk.

The broader context is that the growth of AI, climate-driven supply-chain disruptions and tightening water constraints are reshaping where industries locate, how they operate and how they compete. AI is also accelerating water innovation, with predictive analytics, advanced sensors and intelligent supply-chain tools improving efficiency, leak detection and planning. In 2025, water and technology are increasingly intertwined drivers of resilience and competitiveness.

Regulation continues to be one of the strongest levers for accelerating innovation in the water sector. In 2025, tightened oversight highlighted growing awareness of contamination, climate impacts and the need to modernize infrastructure.

One of the most visible policy priorities remains PFAS, or 'forever chemicals.' In 2024, the U.S. Environmental Protection Agency introduced the first national limits on PFAS in drinking water. The new administration has confirmed these rules will move ahead, although some limits may be weaker. Even so, regulatory continuity provides stability for utilities and innovators developing PFAS detection and destruction technologies.

Europe is advancing similar efforts through an EU-wide restriction proposal that could phase out most uses within the decade, while Belgium and France are preparing national action plans combining phaseouts with monitoring and remediation. This clearer policy direction is also helping early-stage PFAS-focused innovators attract capital, including FREDsense and Oxyle, both of which closed Series A funding in 2025. These startups are UpLink Ventures, a part of UpLink and the World Economic Forum’s collaboration with HCL Group to source and scale high-potential solutions in water.

In the UK, Ofwat has demonstrated how regulators can actively drive innovation. In 2025, it extended its Innovation Fund until 2030 with an additional £400 million ($533 million), bringing the total funding to £600 million ($800 million) over ten years. While the Independent Water Commission recommended restructuring the regulatory landscape, support for innovation is expected to continue.

Universities are emerging as influential partners in this shift. At the Stanford Sustainability Accelerator, based in the Stanford Doerr School of Sustainability, eleven projects were selected in May 2025 to advance water resilience, sustainable management and equitable access. These initiatives integrate innovation across technology, community engagement and policy, demonstrating how academic institutions are responding to the rising demand for practical solutions.

Europe is also strengthening coordination through EIT Water, launching its new Knowledge and Innovation Community in 2025, after an €86 million ($100 million) European Commission investment in water resilience. While public investment in water innovation is not new, Singapore’s PUB has led in this space for decades. Ageing infrastructure, climate pressures and tightening regulation are now making innovation a necessity worldwide.

Corporate acquisitions became another defining trend in 2025, reflecting the drive by large utilities and industrial players to strengthen their positions in fast-growing segments of the water market. Some investors once held back due to limited exits, but this is changing as corporates seek technologies that address regulatory requirements, climate risks and industrial water demand.

Significant 2025 transactions spanned multiple regions. In Europe, Veolia Environnement announced its $1.75 billion acquisition of the remaining stake in Water Technologies & Solutions. In Korea, Glenwood Private Equity acquired LG Chem’s water solutions business for $1 billion, expanding its reach in desalination and industrial treatment. In the United States, Ecolab announced plans to acquire Ovivo’s Electronics business for $1.8 billion, strengthening its position in the fast-growing microelectronics and AI sectors.

Consolidation is also accelerating on the utilities side. In 2025, American Water Works and Essential Utilities announced a merger, creating a combined company worth $63 billion, reflecting the growing pressure on utilities to pool resources and capabilities. Smaller municipal systems are increasingly pursuing mergers or partnerships as they confront rising operational costs, labour shortages and the technical demands of modern treatment and monitoring. In Greece, the government announced plans to address its water crisis by consolidating more than 700 municipal water companies into a single entity as part of its water resilience strategy.

These shifts show how rising costs and complexity are pushing corporates and utilities towards larger operating models that can absorb regulatory and infrastructure challenges. Consolidation may help scale solutions and professionalize the sector, but the challenge for 2026 and beyond will be ensuring that efficiency gains do not narrow competition or limit innovation.

In 2025, investors, regulators and corporates all helped accelerate the pace of water innovation. Yet, fragmentation, underinvestment and system-level constraints still limit global progress. As new capital is deployed and corporate water-stewardship commitments move into implementation, 2026 is poised to become a year of tangible delivery.

The UN Water Conference in the United Arab Emirates will serve as a major milestone, offering a rare opportunity to align finance, policy and technology around shared water goals. The question now is whether the momentum built in 2025 can translate into a more connected, innovation-driven global water agenda.