The Water Footprint of AI: A Threat to Sustainability for Tech Giants, US

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The burgeoning field of generative artificial intelligence (AI), exemplified by tools like OpenAI’s ChatGPT, is raising concerns over the increasing water footprint of major technology companies. A study led by Shaolei Ren at the University of California, Riverside, found that ChatGPT consumes approximately 500 milliliters for every 10 to 50 user prompts. This data highlights the significant water usage by AI technologies, which could hinder sustainable and ethical application. Microsoft’s water consumption has already risen by over a third in just one year. While Google claims that the energy needed to power AI technology is rising at a slower rate than predicted, experts caution that the increasing efficiency of AI can lead to more energy and resource use. This poses a dilemma for Big Tech in advancing AI innovation while minimizing strain on water resources.

This environmental challenge also presents an investment opportunity in the water sector. Bank of America recently proposed a $1 billion ETF focused on water, called the First Trust Water ETF. The ETF aims to track the performance of the ISE Clean Edge Water Index and invests in companies generating a significant portion of their revenues from the potable and wastewater sector. Given the scarcity of water and the growing impact of generative AI, the ETF could be even more compelling to investors.

The water footprint of AI technologies highlights the need for sustainable practices and resource management. Companies and policymakers must find ways to advance AI innovation while minimizing the strain on vital water resources. As the demand for AI continues to grow, it is crucial to prioritize sustainable development and responsible usage to mitigate the environmental impact. The First Trust Water ETF provides an opportunity to invest in companies focused on addressing the water crisis and ensuring the long-term availability of this essential resource.

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