Politicians in the North must act now or risk new projects failing because of pressure on supplies, with Yorkshire facing a greater need for action than the North West or the North East, according to IPPR North.
The think-tank has warned that unless there is a reduction in water use among households and businesses, demand for water in Yorkshire could start to exceed supply by 2035.
And it says that without a reliable and sustainable supply of clean water, and effective and efficient waste water systems, "activity in the Northern Powerhouse would quickly grind to a halt".
It adds: "To date, conversations about the future of the region and its economy have largely taken the North’s water resources for granted."
The report Natural Assets North: Water in the Northern Powerhouse says climate changed will mean all northern regions will see significant reductions in rainfall and water flow in the coming decades.
Though some gains will be made by more efficient household water use, these will be cancelled out by population growth and a growing demand for energy.
In Yorkshire, Yorkshire Water oversees two water resource zones (WRZs) taking in the region's rivers, lakes and other sources.
The main one, the Grid Water Surface Zone, covers 99 per cent of its customer base and a population of 5.2 million people, supplying 1,367 megalitres of water a day.
The report says that by 2045, climate change will mean the amount of water available in the main WRZ is forecast to drop below the amount being used if nothing is done to address the problem.
A planned reduction in water being lost through leakage, behaviour changed through increased use of meters and reduced demand from industry is expected to result in a slight fall in demand over the same period.
It adds that Yorkshire Water is investing to reduce the amount of leakage by 40 per cent by 2025 and create a new supply through two boreholes.
It says: "If successful, this will remove the risk of a deficit in supply by 2045 and increase water security for the Yorkshire region within the legal 25-year planning period."
The report's author, IPPR North research fellow Jack Hunter, says a shift in public attitudes is needed so that as a society we use "much less water than we do currently". He says much more must be done to mitigate the impact of new developments upon water demand.
Mr Hunter urges northern political and business leaders to recognise that "sustainable water systems play a foundational role in the health of the region’s population, of the Northern Powerhouse economy, and the natural environment".
He said: “In the face of climate breakdown, none of us can afford to take water for granted, and this is as true in the North as it is elsewhere in the country.
“This is a shared problem that requires shared solutions. Water companies need to deliver on their plans to dramatically reduce leakages and households, businesses and political leaders all need to treat water much more responsibly in future.”
A Yorkshire Water spokesman said: “Water is a resource many people in the UK still take for granted. On average, we each use between 130 and 150 litres of water each day but this could be cut significantly by adopting simple water saving techniques.
"By being more water efficient this also helps ease the pressure on local rivers and reservoirs, creating more stable environments for the wildlife that lives there.
"We also aim to do our part by reducing leakage by 15 per cent by 2020 and this year are installing 34,000 acoustic loggers on our underground pipe network, which will give us a much greater understanding and visibility of what is happening in some of the areas most prone to leaks.”