Corn ethanol is not cost effective in any way (relying heavily on government subsidies in order to be economically viable) and harms food supplies, raising world food prices. Any effects ethanol production has on world food supply will ultimately lead to the planting of more food (due to higher prices), which would be an even larger burden on the water supply.
These days, corn ethanol requires far too much water considering that our water resources are limited. The United States produces mass amounts of corn in order to create ethanol, and this ethanol does relatively little for the entire country. Ethanol is a great product, but our return on such an investment is diminished, considering the immense water waste.