A new report warns of growing competition for the world's limited freshwater supplies. The World Economic Forum says water is needed to meet increased energy demands, while climate change is leaving large areas of the world chronically short of the precious resource.

Three-quarters of the Earth's surface is covered with water, but only three percent of that is available for human use. And while that three percent has remained relatively constant over the years, global consumption is reported to have grown at over twice the rate of world population growth.

The new report ? Thirsty Energy: Water and Energy in the 21st Century ? says water is increasingly becoming of "strategic significance." That's because water is "critical" to energy production, from Middle Age water wheels to modern power plants. The report says the link between water and energy "is stronger than ever and is becoming more strained as human usage of both energy and water increases."

Christoph Frei, World Economic Forum's Senior Director of Energy, says, "Usually it's pointed out there's a strong link between energy security (and) climate change, etc. What one tends to forget is that water is an additional element that one should keep in the picture."

The report says that "access to water is a growing risk for the electric power industry as it plans to invest in new plants." In areas where freshwater is in short supply, a "battle over water rights" may ensue. And with energy companies under pressure to reduce greenhouse gas emissions, there may be a greater demand for water to grow bio-fuel crops. The report says, "The quality and quantity of water available to support energy production, and all other human activity, will become an increasingly crucial issue in many parts of the world." And Christoph says that greater demands are being made on energy production.

"Every single unit that you add to the system is usually coming from a source that is increasing water thirst and I can give examples. It's not only true for bio-fuels, it's obviously true for many of the non-conventional fossil fuels. It's true if you're talking about technology such as coal liquification or gasification. It's true about many of the additional energy units that you bring to the system," he says.

The World Economic report says that there is a need to use water much more efficiently. But while worries over water are global in nature, the report concludes that solutions may have to be local, since "transporting water over long distances is not economically feasible." Some countries with a history of water shortages, such as those in the Middle East, have tailored their energy industry to continually reuse water supplies.

Energy production may also feel the squeeze from agriculture, which is the world's largest water consumer. And with a fast growing world population, agriculture's share of water use is expected to increase.

Christoph says that while the energy industry is being made more "climate friendly," it should not be made more "water thirsty."