Many of the answers here are good. However in the 1980’s there was a push to use water based fluids in the Industrial Hydraulics Industry. Think inside a heated factory. The fluids were called 95/5 as they were 95% water and 5% additives designed to combat the negative affects noted by others. While there was some success the lower lubricity caused problems most manufacturers had trouble overcoming. The faults were shorter life of the components. When I left the industry in the mid 1990’s most companies had abandon the development of water based hydraulics.
This development never made headway in the mobile industry. Think excavators and outdoor machinery for the reasons many have noted here.
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