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Using tap water can introduce deposit problems related to minerals in the water. So, it's best to use distilled water, at least if water injection is to be used long-term. Of course, distilled water would add around a dollar per gallon for the water used.
The use of water to quell excessive combustion heat might enable some timing advancement without early detonation, thus potentially increasing fuel economy. It can also keep combustion chambers free of carbon deposits, but if not careful it could results in a bit of rust as well.
The use of methanol would provide a few a more calories for the combustion chamber, thus potentially increasing MPGs and power. However, the methanol does not come free, and as noted, the operator must be careful not to overdo things to avoid potential engine damage. So there are costs and risks involved.
When the hydrated engine is used under a lot of load, such as in a vehicle used for towing over long distances and up high grades, it can take prodigious amounts of water and methanol. So, provisions must be made to contain adequate amounts of the mix on board.
The economy and efficacy of water injection depends on circumstances.
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