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Water injection in some cases increases the density (has a similar effect of increasing the ambient air pressure) of the inlet air and lowers it temperature thus preventing pre-ignition. This only works when the gases going into the engine are an air/gas mix. Whilst it may reduce the risk of pre-ignition and the resulting power loss it will not assist the fuel/air mix to burn more efficiently. On high performance engines this is a bit of a trade-off especially when using high octane fuels which have lower ignition temperature - hence more likely to cause pre-ignition and serious engine damage like a smashed crankcase with a con-rod poking its leg out (in our part of the world this is referred to as calving).
Additionally the metals in the engine will suffer spalling which will seriously shorten engine life but when racing, etc generally that is not a problem as many engine are designed only to last one racing session anyway.
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Honda Civic 1.4l