Water is needed for photosynthesis to occur. If you remember, when chlorophyll gets excited by a particle of light, an electron gets energized. The electron can go in one of two directions. First, it can be used to make ATP while the energized electron cycles back to the molecule it came from. This process is called cyclic photophosphorylation and it utilizes P700.
Second, the electron can go in another direction where it combines with NADP+ to form NADPH that then goes on to another part of the photosynthetic process. During the formation of NADPH, ATP is also produced. This is called noncyclic photophosphorylation. This electron does not return to the parent molecule. This means that the electron needs to be replaced.
The electron is replaced from another molecule of chlorophyll, P680. In turn, this leaves a "hole" in P680. This hole is filled with an electron obtained when an enzyme removes an electron from water. When an electron is removed from water, the result is two hydrogen ions and one atom of oxygen. The hydrogen ion is used to make NADPH.
The atom of oxygen combines with another atom of oxygen to form O2. The oxygen you breathe is a "waste product" from the splitting of water to replace a lost electron.
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