Data centers consume more than 200 terawatt-hours of electricity annually, accounting for about 1-1.3% of global electricity demand (International Energy Agency), and this is only expected to grow. A large portion of this energy drives cooling systems, many of which rely on chilled water. Though this trend is changing at a rapid pace thanks to innovative sustainable practices, water-cooled data center facilities consume significant quantities of water—a typical 1 megawatt (MW) data center using traditional cooling can use about 6.75 million gallons of water per year (Uptime Institute), enough to supply over 67 million people’s water uses for a day, using water use averages in the US. With the global data center market projected to grow at about 10.9% annually from 2023 to 2030 (Grand View Research), water demand is expected to rise substantially.
The Importance of Water to Data Centers
Servers in data centers generate enormous heat, and maintaining optimal temperatures is critical to prevent equipment damage and ensure uninterrupted services. Water-based cooling is popular because water efficiently transfers heat, often requiring less energy than purely air-based cooling. In fact, water-cooled data centers can use about 10% less energy (hence lower carbon emissions) than many air-cooled facilities.
However, this reliance on water introduces unique challenges. In regions prone to drought or water scarcity, data centers must carefully balance their cooling needs with the availability of water. Effective water management in these facilities is more pressing than ever, especially as digital infrastructure expands into water-stressed areas.
Key Water Risks Faced by Data Centers
Through extensive consultations and research, Waterplan’s team of water experts mapped the data center industry’s main challenges in measuring and adapting to water risks. These are as follows:
Water Scarcity: Many data centers are located in arid regions or areas experiencing frequent droughts. Locations such as Los Angeles, USA or Querétaro, Mexico offer some advantages, such as efficient cooling in low-humidity environments and reduced corrosion. They are also strategically placed near major population centers for low-latency service. Nonetheless, operating in water-scarce regions means data centers must compete with other industries and communities for limited freshwater.
Aquifer Depletion: In water-scarce areas, heavy reliance on groundwater can lead to aquifer depletion. Over-extraction of groundwater not only threatens ecosystems that depend on aquifers but also diminishes long-term water availability for surrounding communities. Data centers drawing from stressed aquifers risk contributing to unsustainable water use and may face future supply constraints as aquifer levels drop.
Regulatory Risks: Growing concerns over industrial water use are leading governments and local authorities to enforce stricter regulations on water withdrawals and discharges. Data center operators in high-risk areas could encounter new limits on how much water they can draw, higher costs for water use, or requirements to use non-potable sources. Compliance with emerging water regulations can raise operational costs and even restrict expansion in certain regions if companies are underprepared.
Public Perception: In water-stressed communities, high water usage can draw negative public attention. Local residents and stakeholders may question a data center’s water footprint during droughts or water emergencies. Earning and maintaining a social license to operate requires transparency and proactive community engagement. Companies need to demonstrate responsible water stewardship to avoid reputational damage in these regions.
Case Studies: Proactive Water Stewardship in Data Centers
Real-world scenarios illustrate why early assessment and proactive management of water risk are so important for data centers. Below, we examine two scenarios – one of water scarcity and one of flooding – and how data center operators can respond.
Case Study: Scarcity in Los Angeles, California
Los Angeles, California is located in a semi-arid region of the western United States that experiences frequent droughts. Historically, Los Angeles has relied heavily on imported water sources, accounting for nearly 60% of its supply from distant regions like the Sierra Nevada and the Colorado River. Local aquifers provide only about 11-12% of the city’s water supply in normal years.
A granular analysis of L.A.’s groundwater levels shows the long-term trend has been in decline– a groundwater anomaly (meaning deviation from the norm) shows a progressive decrease in availability over past decades. In the last five years, this downward trend in groundwater has only accelerated, underscoring the region’s vulnerability.
Contributing to the challenge, local infrastructure and budget constraints have hindered effective water management. Projects aimed at increasing local water supply through stormwater capture and wastewater recycling are often delayed or underfunded. While the region is working toward water independence - limiting the dependence on imported water by investing in water reclamation - the majority of stormwater still flows into the Pacific Ocean instead of being utilized.
Los Angeles’ increasing population, dependence on external water sources and unprepared infrastructure makes the region vulnerable to droughts, rating a medium-high for scarcity risk.
For data centers operating in the Los Angeles area, dependence on municipal water supplies creates a business risk. During severe droughts, data centers might see their water allotments reduced in favor of critical community needs. There is also reputational risk if local media or stakeholders perceive data centers as competing with residents for scarce water. To mitigate water scarcity risk, data center companies can take several key actions:
Use Alternative Water Sources: Wherever feasible, source water from outside the stressed municipal supply. Some facilities can use recycled wastewater or reclaimed water from treatment plants for cooling, or harvest rainwater during wetter periods for later use.
Implement Water-Efficient Technologies: Maximizing water-use efficiency is crucial. This can include installing advanced cooling systems that require less water, optimizing cooling tower operation to reduce evaporation loss, and reusing greywater on site. Dry-cooling technology is a particularly effective solution—using air or refrigerant-based cooling instead of evaporative water cooling. While dry coolers might increase energy use slightly, they minimize or eliminate water consumption for cooling. Modern data centers are also exploring AI-driven optimization to adjust cooling in real time, ensuring no more water (or energy) is used than necessary.
Develop Contingency Plans: Companies should have a water security plan for drought conditions. This includes on-site water storage for emergencies, redundant connections to multiple water sources (where available), and contracts with water trucking services as a backup. Planning for worst-case scenarios ensures continuous operation even if municipal supplies are curtailed.
By finding substitute water sources and investing in efficiency and innovation, data centers in Los Angeles and similar regions can greatly reduce their dependence on stressed external water supplies, protecting operations and demonstrating corporate responsibility in sharing a limited resource.
Addressing Water Risk in the Data Center Industry
The data center industry faces a dual challenge: ensuring reliable cooling and operations, while reducing impact on local water resources. Addressing these challenges requires a balanced approach that blends responsible resource use, community engagement, and advanced technology. Leading data center companies are increasingly converging on a set of best practices, as outlined below:
Water Efficiency: Data centers must optimize cooling while minimizing water impact. Strategies like air-side economization and closed-loop liquid cooling reduce freshwater use. However, eliminating water entirely can increase energy consumption, so hybrid cooling—using air most of the year and water only during peak heat—helps strike the right balance, especially in water-stressed regions.
Accurate Data and Water Risk Assessments: Reliable data is crucial for managing water risks. Operators use water risk assessment tools to evaluate site conditions, identify high-stress areas, and guide site selection and mitigation strategies.
Water Recycling and Reuse Systems: Data centers are adopting filtration and purification technologies to reuse cooling water multiple times, reducing waste.
Alternative Water Sources: Diversifying water supplies with redundant cooling systems, dual feed lines, on-site wells, and storage tanks reduces reliance on municipal water. Many use recycled or treated effluent for cooling—Google, for example, relies on non-potable wastewater at 25% of its campuses.
Advanced Cooling Technologies: Innovations like dry cooling and liquid cooling significantly reduce or eliminate water use. While some systems increase energy use, intelligent controls optimize both power and water efficiency, making modern cooling a key strategy for reducing reliance on local water supplies.
Invest in Outside-the-Fence Water Initiatives: Leading data centers support local watersheds by collaborating with NGOs, utilities, and communities on conservation and replenishment projects. Microsoft has also contributed to 49 water replenishment projects globally, restoring over 61 million cubic meters of water. These efforts offset consumption, enhance water security, and contribute to long-term regional sustainability.
Community Engagement: Open collaboration with local governments, utilities, and communities builds trust and ensures sustainable water use. Data centers foster public transparency by sharing usage data, joining stewardship initiatives, and funding regional water projects. Proactively addressing community concerns—such as investing in local water infrastructure or increasing recycling—helps secure a social license to operate and maintain public trust.
Bridging the Gap with Technology: How Waterplan Can Help
Advancements in technology offer new ways to reduce water risks and promote sustainable water use in data centers. These technologies not only enhance efficiency but also empower data centers to become leaders in water stewardship.
Water Risk Assessment: Waterplan integrates business data with water risk evidence from multiple sources at each site, leveraging AI to gather local public reports. This approach offers a comprehensive understanding of water risks, including scarcity, quality, flooding, regulatory, reputational, and infrastructure risks. By centralizing and scoring water risk indicators, Waterplan enables continuous monitoring and management, informing strategic decisions for data center site selection and development.
Implementation Partners Network: Waterplan connects companies with a network of vetted partners to implement effective water management projects. This collaboration ensures that companies can achieve their water targets by selecting and executing the right projects, tracking progress, and measuring impact. This integrated approach enhances water stewardship and contributes to long-term sustainability goals.
Smart Water Management Systems: Waterplan's platform enables data centers to integrate IoT sensors, meters, and AI-driven analytics to monitor and optimize water use in real time. By providing centralized and reliable freshwater data, the platform helps detect anomalies, track consumption, and assess the effectiveness of water management strategies. This data-driven approach ensures proactive management of water resources and enhances long-term sustainability
Collaborative Platforms: Waterplan facilitates communication and data sharing between data centers, water utilities, and other stakeholders. By centralizing water risk data and aligning it with major disclosure and compliance frameworks, the platform promotes a collective approach to water management. This collaboration enables shared insights into water risks and best practices, fostering transparency and accountability in water stewardship efforts.
Takeaways
As the demand for digital infrastructure continues to grow, so do expectations that data centers will manage natural resources responsibly. Water stewardship has become a core component of sustainable data center operations. Successfully addressing water risk requires not only investing in new technology and efficient design but also a commitment to transparency and community collaboration.
The good news is that a unified approach is emerging. Industry leaders are aligning on best practices – adopting innovative cooling technologies, implementing water recycling systems, conducting rigorous risk assessments, and engaging proactively with local stakeholders – to minimize environmental impact and enhance resilience. Many of the largest operators have set ambitious public targets: for example, some aim to achieve water-neutral or even water-positive operations by 2030, meaning they will offset or replenish at least as much water as they consume. This collective drive signals an industry-wide commitment to safeguarding water resources.
Sustainable water management is not only crucial for protecting data center uptime and reliability, but also vital for ensuring a positive legacy in the communities and environments that host these facilities. By acting as responsible water stewards – through efficiency, innovation, and partnership – data centers can support a more sustainable future where digital advancement is balanced with environmental and social needs.
