[Ruling on Spending Zakat on a Water Source]

Answer—and Allah is the Granter of success: If the pump is for the benefit of the people of the village in general, and for whoever comes to that water source, then there is no harm in that—provided the poor of the town are already sufficiently provided for; if there are poor in need, then they have priority. What is meant by “sufficiently provided for” is that their need is covered at the time of disbursement.
This is on the condition that the zakat payers are not the only beneficiaries of it, nor the predominant group in the village. It is not permissible to spend zakat on something whose benefit returns to the one disbursing it—such as spending it on his son, one whose maintenance is obligatory upon him, or his slave. The same applies here: the majority of beneficiaries must not be the zakat payers themselves. There is, however, no problem if the zakat payers also benefit along with others in the ordinary sense—i.e., he benefits from the water just as others do: he drinks as they drink, purifies himself, waters his animals, and the like.
All of this clarifies what the jurists of the madhhab meant when they said: zakat may be spent on the public interests of the Muslims when the poor are sufficiently provided for.
The proof for what we have said is that when Allah, Exalted is He, mentioned the categories of zakat, He included “in the path of Allah,” saying: “Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakat] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler—an obligation [imposed] by Allah.” [al-Tawbah:60].
Source : Min Thimār al-ʿIlm wa al-Ḥikmah vol.1