The digital water market is undergoing a significant transformation, with AI-powered technologies at the forefront of this evolution. The market, valued at USD 6.69 billion in 2024, is projected to reach USD 16.29 billion by 2032, growing at a CAGR of 11.85%. This surge is driven by the urgent need for sustainable and efficient water management, as utilities and industries grapple with water scarcity, regulatory changes, and aging infrastructure.
In the U.S., the digital water market is estimated to reach USD 1.57 billion in 2024, with a projected growth to USD 3.35 billion by 2032, at a CAGR of 9.99%. This growth is fueled by the adoption of technologies like IoT, AI, digital twins, and smart meters, which enable real-time monitoring, predictive maintenance, and data-driven decision-making. AI implementations, including models like support vector machines and convolutional neural networks, are achieving over 90% accuracy in leak detection, significantly reducing non-revenue water and supporting long-term planning.
North America currently leads the digital water market with a 38.61% revenue share, driven by rapid smart technology adoption, large-scale regulatory frameworks, and sustainability goals. The region’s dominance is further bolstered by investments in IoT and AI platforms from suppliers like Itron and Xylem. Meanwhile, the Asia Pacific region is projected to grow at the fastest CAGR of 13.14% from 2025 to 2032, led by China’s urbanization and industrialization, along with strong government support. Siemens and Honeywell are expanding smart meter and IoT solutions across the region. Europe is also seeing strong momentum, with Germany, France, and the UK deploying digital tools to improve sustainability and water efficiency.
The software segment holds the largest market share at 58.21% in 2024, driven by the demand for system integration, predictive modeling, and real-time analysis. AI-powered and cloud-based platforms from industry leaders like IBM, Oracle, and Siemens are advancing these capabilities. The services segment is projected to grow at the fastest CAGR of 11.90% from 2025 to 2032, fueled by increasing needs for consulting, integration, and AI-enabled maintenance from providers like SUEZ and Veolia.
In terms of end users, the municipal water segment leads the digital water market with a 63.90% share in 2024, driven by the demand for smart metering, leak detection, and distribution. IoT-based solutions for improving conservation and regulatory compliance have been introduced by companies such as Schneider Electric and Xylem. The industrial segment is projected to grow at the fastest CAGR of 13.56% from 2025 to 2032, as industries increasingly adopt digital tools for water treatment, waste management, and sustainability, with players like ABB and Siemens spearheading this transformation.
The Internet of Things (IoT) segment led the digital water market in 2024 with a 34.93% share, due to its rapid developments in real-time tracking, leak detection, and water quality monitoring. Global leaders like IBM, Cisco, and Honeywell provide IoT-based solutions that assist municipalities and industries in improving operational efficiency and shifting towards sustainability. The digital twin segment is set to grow at the fastest CAGR of 13.50% from 2025 to 2032, with companies like Bentley Systems and Siemens enabling virtual modeling for predictive maintenance and performance optimization.
Recent developments, such as Air Selangor’s partnership with Schneider Electric to deploy digital twin technology at Semenyih 2 WTP and Veolia’s joint venture with AI startup Alcom to launch Ekydra, highlight the growing trend of AI-powered water management solutions. These initiatives aim to enhance real-time monitoring, predictive forecasting, leak detection, energy optimization, and ecosystem protection, advancing sustainable water management.
This rapid evolution in the digital water market is set to reshape the sector, driving innovation and efficiency in water management. As utilities and industries increasingly adopt these technologies, we can expect to see significant improvements in water conservation, regulatory compliance, and operational efficiency. The sector is poised for a transformative shift, with AI and digital technologies playing a pivotal role in addressing the global water crisis.