Rising AI demand is expanding global data centers, potentially threatening water reserves and sparking calls for greater transparency.
Data centers are essential computational infrastructure, powering nearly all of today’s digital activities, especially commerce. Lower- and middle-income countries, eager to capitalize on digital transformation and economic growth, have rushed to build this infrastructure.
But there’s a problem: Data centers are water guzzlers, and many countries are currently expanding their data center footprints while ignoring potential water risks. This trend has already resulted in increased water scarcity in several regions, posing heightened social, political, and ecological risks. Further, the salience of artificial intelligence (AI) as a driver of data center demand is only increasing, as AI’s thirst is projected to rival or soon surpass other water-intensive industries such as cattle and textiles. Transparency about AI’s role in exacerbating data centers’ climate impacts is especially consequential now as climate change worsens and industries continue to push AI-based solutions for societal problems.
However, the international community lacks a clear understanding of data centers’ impacts on water resources, as there are no uniform regulatory requirements for data center operators to track and report their water use. Transparency reporting around data center water use has therefore emerged as a promising policy measure to better assess and limit current and future water stress. Policymakers have a critical window of opportunity to address data center-induced water risks: By promoting transparent water use reporting, policymakers can advance insights into the scale and scope of data center-induced water risks and help develop timely interventions.
How Data Centers Use Water
While data centers’ energy consumption has been a topic of growing policy concern since the 2000s, their enormous water footprint remains underexplored. A small, 1-megawatt data center is estimated to use up to 26 million liters of water a year (the average capacity of small data centers is between 1 and 5 megawatts). This amounts to the yearly average water consumption of about 62 families in the United States. To put things into perspective, the current total U.S data center capacity is over 40,000 megawatts—the average yearly water consumption of over 2 million families.
Liquid-cooled data centers use water mainly as a coolant to maintain optimum operating temperatures. Drinking water or potable water is typically used, as it is free of impurities that may corrode server systems. Data centers use either closed-loop or open-loop cooling systems depending on whether coolant water interacts directly with the air. In closed-loop systems, water loss to evaporation is limited, as coolant water is circulated through closed pipes or tubes, never interacting directly with the environment. While closed-loop systems are more expensive, they are relatively more water efficient than open-loop systems where water is permanently lost to evaporation. Most large data centers use some type of evaporative cooling method. Data center water use depends on both the peak activity times and the location of the data center, meaning water consumption is dynamic and susceptible to change in response to external climatic factors and resource availability.
Understanding what drives data center water use helps to pinpoint how much water is permanently lost or displaced and, as a result, to determine its scarcity in a region. Transparency around water loss, displacement, and unintended distribution would enable decision-makers to better assess localized water risks and set water use thresholds. Without this information, policymakers may struggle to address resource displacement to curb uneven scarcity.
Data Center-Induced Water Stress Spurs Political Tensions
Developing economies have prioritized data center expansion to advance national digital transformation and digital sovereignty goals, benefiting transnational tech corporations. In addition to gaining access to new markets, these corporations are often incentivized or rewarded by Global South governments through tax subsidies, low-cost real estate contracts, and promises of minimal monitoring.
Policies to attract data center investments across regions that are already water stressed have led to growing tensions among populations most affected by water scarcity. In India, Bengaluru’s data center capacity of about 115 megawatts is expected to rise as transnational tech corporations plan to expand cloud data centers in the city. Together, Bengaluru’s data centers currently consume an estimated 8 million liters of water per day. Such unsustainable consumption trends threaten fragile water systems in a city that recently experienced its worst water crisis in 500 years.
In Bengaluru, the city’s water scarcity has spurred public backlash and election boycotts, yet the role of data centers in contributing to water scarcity has remained unexplored. This trend is not limited to India. The Uruguayan government’s decision to allow Google data centers amid the country’s worst drought in 74 years led to widespread outrage among residents, prompting mass protests. Chile’s then-president Sebastian Pinera faced condemnation and calls for transparency from residents in two of Santiago’s most water-stressed suburbs, Cerrillos and Quilicura.
While chronically water-stressed countries in the Global South stand to be impacted more adversely, data center-induced water stress has emerged as a concern in advanced economies as well. Data centers’ freshwater consumption in Loudoun County, Virginia, has increased by 250 percent since 2019, resulting in drought-like conditions for residents and leading to public calls for more industry oversight. Meta’s plans to build data centers in Zeewolde, Netherlands, were met with massive local opposition over their potential impact on groundwater reserves.
While governments have yet to design or implement transparency requirements, collective civil action has had fragmented, yet impactful, successes. In Chile, citizen action led to the legal revocation of Google’s data center permits pending robust environmental checks. In the U.S, a citizen group successfully challenged the nondisclosure clause between Google and the city of The Dalles, Oregon, requiring city officials to disclose the local data centers’ water consumption metrics. In Zeewolde, the Dutch government revoked zoning permissions for Meta’s data centers. In contexts where water scarcity is dire, calls for political action have manifested in increasing civil unrest.
Emerging Actions Are Welcome but Remain Fragmented and Insufficient
Several transnational tech corporations have acknowledged the concerns around water stress and have adopted voluntary sustainability measures. Google and Microsoft committed to following in-house sustainability and corporate social responsibility practices. These include investments in “green data centers” that use recycled water, more water-efficient closed-loop systems, and renewable energy sources.
While welcome, these measures are insufficient without more corporate and government transparency. Transparent reporting is necessary to implement efficient and timely mitigation measures. Currently, hyperscale cloud service providers (CSPs)—large facilities owned by cloud providers, telecommunications organizations, and tech firms such as Google, Meta, AWS, and Microsoft—withhold their water use data, citing proprietary reasons including protection of trade secrets. However, corporations have not yet addressed queries into how or why reporting water use data threatens these secrets. Meanwhile, local utilities and elected representatives, incentivized by tax subsidies, enter into confidentiality agreements with corporations that limit information sharing. These postures ultimately undermine accountability and public trust, while pushing already stressed water resources into further precarity.
In a precedent-setting step in 2024, the EU imposed water and energy use reporting requirements on data centers operating in EU regions. As part of a wider policy push to set data center sustainability standards, the EU adopted the Energy Efficiency Directive (EED), requiring data center operators to track and report water use to a central database with access granted solely to the EED. While this is only a first step in a long road to water security, it is an important signal to other national actors to interrogate and address data center-induced water stress.
The decision to activate regulatory levers may be especially consequential for jurisdictions across the Global South, where national decision-makers must balance the economic growth promised by digital transformation with its environmental costs. Currently, it seems like leaders are deprioritizing the latter, with industrial policies focused instead on data center expansion while circumventing or ignoring environmental obligations. This will likely have far-reaching sociopolitical and ecological consequences.
Transparency Is the First Step on a Long Road to Sustainability
More transparency is ultimately in the interest of all actors involved. Corporations operating data centers in highly water-stressed regions could face long-term operational and legal risks if water resources are exhausted irrevocably. The economic and social impacts of heightened water insecurity on local populations will continue to diminish public trust and pose reputational risks for corporations and local leaders.
National decision-makers setting terms with transnational tech corporations—especially decision-makers in the U.S.—should consider baking in transparency requirements at the operational outset. U.S regulators are key levers for incipient policy change given their jurisdiction over large corporations building data centers worldwide.
The context-specificity of data center water use means that transparency models designed in one region may not always be useful or relevant in another. Tailored transparency requirements will help regulators assess and prevent the extent of data center-induced water stress and the ways in which it manifests locally.
Civil society action has so far been a fulcrum for accountability in exacting transparency from corporations and governments. Fragmented yet consistent action from local communities has pushed decision-makers to consider the risks posed by data center resource drain. Ongoing and future efforts in this vein may elicit successive policy actions, starting with transparent reporting, that are nuanced and pragmatic.
Ultimately, the urgent need for concerted action lies in the simple fact that water is finite, and while its irreversible exhaustion poses existential risks in the end for all, some populations—especially the global majority—stand to face immediate and disproportionate harms.
– Lakshmee Sharma is a senior research analyst with the Technology and International Affairs program at the Carnegie Endowment for International Peace. She holds an M.Sc. in social anthropology from the University of Oxford and a M.A. in law and diplomacy from The Fletcher School. Published courtesy of Lawfare.
