Announcing its first global plant-by-plant study, Greenpeace said coal power use will increase with newly built plants, causing "huge stress" on the world's major river basins and threatening communities.
In its report "The Great Water Grab: How the Coal Industry is Deepening the Global Water Crisis", released in Hong Kong, the environmental activist group urged governments to stop depending on coal, a major source of electricity and a pollutant.
It highlighted Asian giants China and India as being at the forefront of the battle with their heavy use of coal.
"By choosing to continue huge investments in coal to power their economies for decades to come, governments would commit the world to a future of an ever more desperate fight for scarce water resources," the report said.
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The watchdog looked at data from the world's 8,359 coal plants and information on another 2,600 planned plants.
It found that the existing plants "consume enough water to meet the basic water needs of over one billion people".
Over 40 per cent of planned and existing plants are in areas categorised as "high water stress".
It named China, India and Turkey as three countries that have the most planned plants on areas that are running dry.
China's rise to become the world's second-largest economy was largely powered by cheap, dirty coal. Although the world's top greenhouse gas emitter has in recent years taken strides into renewable options, it still relies heavily on coal to power its industries and heat homes.
"Huge numbers of people" could be threatened, losing farms and ground water, if coal power expansion continues, he said.
The report added that countries were also risking their economies and social stability as they faced "stark choices" over allocating water supplies to the coal industry or to meet people's basic needs.