Methanol and ethanol are among the most important biofuels and raw materials used to produce biorenewable fuels. These fuels are used with varying water contents. Nevertheless, the exact impact of the water content of these fuels on the energy potential and combustion characteristics is still unknown. Besides that, there are two noticeable risks (environmental impact of combustion and fire risk) associated with their production, processing, and utilization. Likewise, impact of the water content of these fuels on fire risk and the impact of their combustion on the environment is also unknown. The best indicator of energy potential is the effective heat of combustion, and the best combustion characteristic and indicator of the impact of the combustion of alcohols on the environment is the carbon monoxide (CO) yield, whereas the fire risk of liquid fuels is quantified by the flash point and maximum heat release rate (mHRR). The dependency of flash point on the water content was determined via the Pensky-Martens apparatus and the dependencies of the effective heat of combustion, CO yield, and mHRR on the water content were determined via the cone calorimeter. With increased water content, the flash points of both methanol and ethanol exponentially increased and the both effective heat of combustion and mHRR almost linearly decreased. In the range of water content from 0 to 60%, the CO yield of both methanol and ethanol was practically independent of the water content.