UAE flags $141bn water funding gap amid AI demand

The UAE has warned that a global water financing shortfall of as much as $141 billion a year threatens ambitions spanning artificial intelligence, energy transition, food security and rapidly growing cities.

The warning was delivered at a private roundtable at the UAE’s Permanent Mission to the United Nations in New York, where about 50 chief executives, investors and philanthropy leaders examined how to turn viable water projects into financeable investments ahead of the UN Water Conference in Abu Dhabi in December.

Abdulla Balalaa, UAE Assistant Minister of Foreign Affairs for Energy and Sustainability, said water was becoming a defining factor in economic growth, competitiveness and resilience. “The AI revolution, the energy transition, food security and urban growth are all water stories,” he said.

Balalaa said the expansion of artificial intelligence was also a water issue because data centres and other digital infrastructure depend on dependable water supplies, particularly for cooling and electricity systems. He said the same constraint applied to energy, industry, agriculture and urban development, making water infrastructure central to broader investment plans.

World Bank estimates put the additional annual spending needed to achieve universal access to safe water and sanitation at between $131.4 billion and $140.8 billion. Developing countries spend about $164.6 billion a year on water, equivalent to roughly 0.5 per cent of their combined gross domestic product, with public sources accounting for about 91 per cent of that expenditure and private finance contributing less than 2 per cent.

The funding challenge is unfolding alongside large service gaps. United Nations data show that 2.1 billion people lacked safely managed drinking water in 2024, while 3.4 billion lacked safely managed sanitation. The UN’s 2026 Sustainable Development Goal 6 Synthesis Report says progress on safely managed drinking water must accelerate sharply if universal coverage is to be reached by 2030.

Badr Jafar, Special Envoy of the UAE Minister of Foreign Affairs for Business and Philanthropy, said the main obstacle was not a shortage of technical solutions but the difficulty of preparing projects, allocating risks and attracting capital on terms that can support long development cycles.

“Water is easy to undervalue because, for most of us, it appears on demand,” Jafar said. He described it as infrastructure underpinning food, energy, cities and the data centres supporting artificial intelligence, and argued that business, investors and strategic philanthropy could help governments move projects towards financial close.

Participants examined the factors that often prevent water schemes in climate-stressed and fast-growing markets from becoming commercially viable, including project preparation, offtake arrangements, regulatory uncertainty and operating risks. They also discussed the role of catalytic finance and first-loss capital in absorbing risks that conventional investors may be unwilling to take.

Long-term guarantees, local-currency financing and dedicated project-development facilities were among the mechanisms considered for bringing more projects to market. The meeting also assessed opportunities in water reuse, leakage reduction, storage, efficient desalination and digital monitoring, with participants stressing that technology needs to be paired with capable governance and local operating expertise.

Official development assistance for water fell 23 per cent in 2025, adding pressure to mobilise commercial and blended finance at a time when governments face competing fiscal demands and infrastructure needs across multiple sectors.

The discussions came as the UAE prepares with Senegal to co-host the 2026 UN Water Conference at the Abu Dhabi National Exhibition Centre from December 8 to 10. The gathering will focus on accelerating implementation of Sustainable Development Goal 6, which calls for the availability and sustainable management of water and sanitation for all.

The conference will include six interactive dialogues covering water for people, prosperity, the planet and cooperation, alongside discussions on water in multilateral processes and investment. Organisers are seeking commitments that can translate policy pledges into projects, finance and deployable solutions.