America has been rebuilding its industrial base on shaky ground by ignoring the sine qua non of all production — water.  

In recent years, domestic reindustrialization has moved from populist rhetoric into a strategic imperative. As policymakers seek to facilitate autarkic Western supply chains, they have steered the private sector towards domestic production of energy systems, semiconductors, and heavy industry. Furthest upstream in the value chain, the federal government has passed policy — from the Chips and Science Act to executive orders related to mineral production — to establish a regulatory environment favorable to reshoring and diversifying critical minerals production.¹ Although intended to de-risk against volatile international relations and markets, this industry calculus radically underweights the risk exposure and impact of one critical input: water. 

In the United States, an estimated 332 billion gallons of water are used each day, split between power generation, irrigation, and public supply.² These withdrawals tap declining groundwater aquifers and surface sources. Despite the accelerating scarcity of water, policy responses fixate on controlling demand, rather than directly addressing production constraints — rationing failure over engineering abundance. Facility-level and per capita efficiency gains cannot sufficiently offset exponentially increasing demand — together, the AI boom, increased domestic manufacturing, and a growing population require increased net water usage.³ To de-bottleneck the development of industries critical to U.S. national security, the federal government must facilitate supply-side water resilience. 

A Global Issue 

Water insecurity transcends geography and development status. As such, political tensions have increased over shared transboundary water resources in recent years: 

• Between nuclear powers: In April 2025, India violated the 1948 Indus Waters Treaty signed with Pakistan by diverting flow of the Indus River from Pakistan, and in June, having held the treaty in abeyance for two months, declared its intention to divert permanently the flow of water resources into Pakistan.⁴ Pakistani officials have publicly acknowledged this as an act of war.⁵

• In critical trade routes: Severe, prolonged droughts in 2023-2024 — and predictions of continued water shortage — have compelled the Panama Canal Authority to build a new $1.6 billion reservoir to ensure the Panama Canal’s continued operation, through which passes 40 percent of all U.S. container traffic annually.⁶

• Domestically: Signatory states of the Colorado River Compact of 1922 have faced fraught, drawn-out renegotiations as the river — responsible for the water access of 40 million people, 15 percent of the nation’s total farmland, and $1.4 trillion in annual economic activity — has reduced in flow by 20 percent since the year 2000.⁷

Causes and Impacts 

In aggregate, American sources of water face a growing threat of collapse. The problem is exacerbated by overuse, mismanagement, and compounding effects of climate change – drought, irregular precipitation, increased evapotranspiration, and saltwater intrusion.  

The water scarcity problem extends beyond increased wildfire risk and decreased crop yields. Structural scarcity affects the ability of the United States to provide water for the 15.7 million American households without sufficient access. It also throttles domestic manufacturing industries, power plants, and the 1,200 notoriously water-intensive data centers, of which 500 already are in water-stressed regions.⁸ While the global supply of water is far greater than total demand levels will ever reach, the cost of distribution reinforces shortages in regions of high demand. 

Asking American individuals and businesses to curtail their water usage for various reasons — whether it be for AI and technological advancement, crop and livestock production, critical manufacturing sectors, or for human health — has proven to be a political and logistical challenge. At the same time, this challenge poses national security questions. Nations without allocable water resources to support data centers are unlikely to be AI leaders; those without water inputs to manufacturing processes will depend on foreign countries for critical products; and those without potable water for their citizens are unlikely to maintain political stability. 

The commodity crisis playbook applies: underinvestment creates supply inelasticity, price volatility cascades, and capital markets retreat — precisely the dynamic that precipitated federal intervention in the oil markets during the 1973 and 1979 embargoes. Meanwhile, investment creates price stability, attracts private capital, and enables long term planning. The value of water as a commodity far exceeds its market price. 

Despite the strategic importance of water, the federal government takes a backseat to regional, state, and local regulations, which vary widely. Federal water policy originated in nineteenth-century treaty obligations and Progressive Era reclamation projects, whose institutional legacies are inadequate to the contemporary crisis. In isolated and pronounced crises within the past decades, the Bureau of Reclamation (BoR) has stepped in to regulate water demand to ensure supply — for example, the 2019 Colorado River drought contingency plan and the Central Valley Project serving 25 million Californians.⁹ But even with significant advancements in water production technology and escalating supply-side issues, the BoR has left the solutions to the states. 

Take Action 

With tenuous international supply chains, an accelerating race for artificial intelligence, and a mission for energy independence, the American government must step in to enable scalable supply-side innovation in water production. On par with critical minerals and semiconductors, water is a key ingredient in American industry and requires adequate federal supply-side policy.  

Federal coordination must catalyze three supply-side vectors: optimizing existing sources via extraction, filtration, and distribution; developing new sources; and reusing currently disposed and wasted water. This requires consideration of water as a key national resource and involves funding R&D as part of a wider national security posture. Investing in the technology must lead to an investment in the actual manufacturing processes, which China has demonstrated pays dividends over time.¹⁰

From existing sources, current solutions include improved welling and distribution from water-rich regions (e.g. improved aqueducts to reduce irrigation evaporation), energy-efficient reverse osmosis, distillation desalination, and improved stormwater and wastewater filtration and storage. In particular, ultrapure water filtration for silicon wafers is a critical part of the AI race, while building manufacturing infrastructure near major aquifers and water sources is critical for industrial independence. 

From new and underutilized sources, potential solutions include atmospheric water generation, cloud seeding, and moisture farming, as well as artificial water sources like hydrogen fuel cells. More exploratory technological innovations studying water in the Earth’s mantle may enable yet unforeseen efficient welling access.¹¹

As for the reuse of disposed water, there are plenty of sources: uncaptured sewage, agricultural runoff, power plant cooling water, and industrial process water (used at food and textile manufacturers, semiconductor labs, chemical plants, etc.). 

These highlighted solutions will have asymmetrical impacts, but research into their innovation and enabling their scalability is key to making a dent in this widening imbalance. 

The federal government once built 47,000 miles of interstate highways and stockpiled 700 million barrels of strategic petroleum reserves. Today, data centers drain aquifers, while semiconductors idle without cooling water. The Colorado River withers, while China secures a long-term water supply through coordinated investment. On this call, the U.S. must recognize water as the strategic commodity it has always been and turn towards concrete action. The infrastructure exists, the precedent exists, and the technology is advancing. Federal inaction obstructs American AI and industrial ambitions. It impedes Americans’ basic health and national security. Water security is national security. Policymakers must stand for the production of gallons.

1. The White House. “Immediate Measures to Increase American Mineral Production.” March 20, 2025. ↩︎
2. U.S. Geological Survey. “How Much Water Is Used by People in the United States?” April 23, 2023. ↩︎
3. Warziniack, Travis, Mazdak Arabi, Thomas C. Brown, et al. “Projections of Freshwater Use in the United States Under Climate Change.” Earth’s Future 10, no. 2 (2022). ↩︎
4. Diwakar, Akhilesh Sing. “India’s Gone from Despair to Optimism in 11 Yrs: Home Minister Amit Shah.” The Times of India, June 25, 2025. ↩︎
5. Das, Anupreeta, Hari Kumar, and Zia ur-Rehman. “India and Pakistan’s Air Battle Is Over. Their Water War Has Begun.” World. The New York Times, May 31, 2025. ↩︎
6. Roy, Diana. “Who Controls the Panama Canal?” Council on Foreign Relations, January 29, 2025. ↩︎
7. Colorado River Basin Water Supply and Demand Study. DoI Bureau of Reclamation, 2012. ↩︎
8. Campbell, Dakin. “How Data Centers Are Deepening the Water Crisis.” Business Insider, June 24, 2025. ↩︎
9. U.S. Department of the Interior. “HR 215.” Site page. April 18, 2023. ↩︎
10. Galland, Frank. “‘Rain Control Technologies Used by China Must Be Regulated.’” Le Monde, March 6, 2023. ↩︎
11. Oskin, Becky. “Rare Diamond Confirms That Earth’s Mantle Holds an Ocean’s Worth of Water.” Scientific American, March 12, 2014. ↩︎