Data Center Water Stewardship is the Path to Positive Growth

With the boom in data center development to meet digital demand, water stewardship has become a critical factor necessary for industry growth and community acceptance. Proactive strategies for managing water use and engaging local stakeholders are now essential for sustainable expansion.

Tuesday, December 16, 2025
Reading Time : 5 minutes

The digital economy is expanding at an extraordinary pace, and data centers sit at the center of this transformation. The United States market alone is expected to grow by about 10 percent annually through 2030, while global demand for capacity is projected to rise between 19 and 22 percent each year over the same period. This growth reflects the accelerating demand for cloud services, artificial intelligence, and always-on digital systems.

But growth on this scale magnifies existing stresses. The industry has long struggled with power availability, as grids in North America and Europe strain to keep up. Now water is emerging as an equally critical constraint. In a world already experiencing water stress, data centers, whether operated by hyperscalers or colocation providers, are under increasing scrutiny for how they use and manage this resource.

Why Water Matters

For many years data centers depended on industrial-scale cooling towers where evaporating water helped cool the servers. Over time, digital infrastructure companies sought to minimize consumption through adiabatic and air-cooled technologies. Today the rapid rise of AI workloads is reshaping the equation. Although most next-generation liquid-to-chip cooling systems reduce or eliminate direct evaporation at the rack, they still rely on significant indirect water use through the water consumed in electricity generation.

This shift is already visible. A planned 1.2 gigawatt natural gas plant in Texas that will serve AI facilities marketed as zero-water cooled is projected to consume 1.32 billion gallons of water each year, which is nearly ten times the water used by a conventional evaporatively cooled data center. The conclusion is straightforward. Eliminating water at the server rack does not remove water from the system. It only moves the point where the impact is felt.

There are also new high-density prototypes that bring direct water use back into the facility, including water-cooled chillers and even evaporative cooling towers to manage the extreme thermal loads of AI hardware. These approaches are intended to improve efficiency at the rack, but they reemphasize the broader point that total water demand remains substantial whether the water is used on site or upstream at the power plant.

Author

David Jaeckel

United States

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Communities and Regulators Respond

Since 2022, roughly two-thirds of new data centers have been built or planned in areas already experiencing high levels of water stress. This has fueled growing opposition in host communities. While residents value jobs and tax revenues, they are increasingly unwilling to accept large water withdrawals from limited local supplies.

Local governments are taking notice. Some have imposed moratoriums on new projects until zoning regulations can be updated. Others now require detailed water use assessments as part of permit applications. These measures signal a clear shift: water is no longer considered incidental to development. It is central to whether projects are approved at all.

The result is greater risk for data center owners and operators. Delays in permitting, reputational harm from community pushback, and in some cases outright cancellation are no longer rare. In an industry where speed to market is the overriding goal, these obstacles can be more damaging than cost overruns.

Commitments to Water Stewardship

To address these challenges, many operators are adopting ambitious water stewardship commitments. “Water positive” strategies have become the most visible example. The approach combines operational efficiency with watershed replenishment. Efficiency is often measured through Water Use Effectiveness (WUE), a metric influenced by design choices and climate. Replenishment involves restoring wetlands, recharging aquifers, or supporting local conservation initiatives.

The aim is to return more water to a watershed than the facility withdraws. What began as a sustainability pledge has become a practical necessity, tied directly to permitting approvals, investor expectations, and community trust. For both hyperscalers and colocation providers, the ability to demonstrate credible stewardship is increasingly a condition for growth.

Addressing water is not only a matter of compliance or risk mitigation. It can also create business advantage. Providers that embed water stewardship into their projects can differentiate themselves, attract clients, and strengthen investor confidence.

In build-to-suit projects, incorporating water-positive design and community replenishment measures from the start can offer a turnkey solution that helps tenants meet their own sustainability goals. For leased space, water stewardship can become part of the value proposition, just as renewable energy credits have been used to support carbon reporting. Across the industry, positioning as a leader in water stewardship is becoming a way to compete for both customers and capital.

Planning Early to Avoid Delays

One of the most consistent lessons from recent projects is that water stewardship must be addressed at the outset. We’re working with clients to respond to these pressures as waiting until a permitting challenge or community protest arises is both costly and risky. The investment required to develop a water strategy is minimal compared to the overall capital cost of a data center, yet it can prevent significant delays or even cancellations.

Planning early also enables providers to identify opportunities for community engagement, such as watershed restoration or infrastructure upgrades, which can strengthen local support. These actions are not just about regulatory compliance but about building long-term trust with host communities and being a good neighbor.

Conclusion: Growth Hinges on Trust

The expansion of digital infrastructure is reshaping both technology and resource use. Water, once a secondary concern, has become central to whether data centers can be built at all.

For all data center owners and their tenants, the implications are significant. Projects lacking robust water management strategies face potential delays, regulatory moratoriums, and increasing public resistance. Conversely, implementing effective water strategies enables operators to secure their capacity for expansion, mitigate operational risks, and foster stronger relationships with clients and local communities.

In an environment where the primary objective is to bring facilities online as quickly as possible, schedule disruptions pose one of the greatest threats to success. Demonstrating responsible stewardship through transparent practices and meaningful community engagement has evolved from a best practice into a fundamental requirement for sustainable growth.