Steam injection in gas turbines has been used for many years to increase the power output as well as the efficiency of the system and, more recently, to reduce the formation of NO x during the combustion. The major drawback in steam-injection technology is the need of large amounts of fresh water that is eventually lost into the atmosphere along with the exhaust gas. This loss not only increases the operating costs of the system, but also creates other “external” costs in terms of environmental impacts. In order to take advantage of the steam-injection technology and reduce both operating costs and potential environmental impacts, water recovery systems to recuperate the injected steam from the exhaust gas can be implemented. This paper briefly describes the computer models developed at the University of Massachusetts Amherst to optimize water recovery systems. As an example, the optimum size, power requirement and capital cost for two different systems applied to the GE LM2500 gas turbine are shown. Finally, a comparative economic analysis between the costs of installing and operating a water recovery system and the costs of buying and treating water on a regular basis during the lifetime of the project is presented. The results support the economic feasibility of water recovery for mid-size steam-injected gas turbines before having introduced the external costs associated with the use of water resources.