Which regions hosting AI data centers face the greatest water‑stress risks and what local impacts have been documented?
Executive summary
AI-driven data-center expansion is concentrated in regions already prone to water scarcity—most notably the U.S. West and Southwest (Arizona/Phoenix), parts of the Mediterranean and southern Europe, and several emerging clusters in Latin America, the Middle East and Australia—creating measurable local impacts on water availability, infrastructure stress and community backlash [1] [2] [3] [4]. Reports from Ceres, Bloomberg, Reuters, MSCI and others document basin-level stress increases (single‑digit to low‑double‑digit percentage points), large per‑facility withdrawals and both regulatory and market responses—while industry pilots waterless cooling and closed‑loop designs to blunt the worst effects [5] [6] [7] [8] [2].
1. The hottest hot spots: Phoenix/Arizona and the U.S. Southwest
Phoenix and the broader Colorado‑River basin have emerged as the clearest case study: researchers warn that if planned facilities come online the Phoenix metro could see annual water stress rise as much as 32%, with region‑wide withdrawals projected to jump dramatically—projections that underpin strong local opposition and design changes at some projects [6] [8] [5]. Multiple analyses show about two‑thirds of new U.S. data centers since 2022 sit in high‑water‑stress locales, concentrating impacts in arid states where low humidity, cheap electricity and favorable policy attracted developers despite limited freshwater supplies [1] [4] [2].
2. Global clusters at risk: Latin America, Turkey, Australia and the Mediterranean
MSCI’s geospatial work highlights that existing and planned clusters in Chile, Brazil, Mexico, Turkey and Australia face growing scarcity days by mid‑century, while reporting and advocacy groups flag pressure in Spain and parts of southern Europe—regions where rapid digital expansion meets climate‑driven declines in supply [3] [9]. Bloomberg, EthicalGEO and others document that data‑center siting in these regions is already tangling with local water priorities—agriculture, municipal supply and ecosystem needs—raising questions about equity and long‑term sustainability [2] [9].
3. How much water, and where it shows up: direct withdrawals and indirect demand
Large facilities can require millions of gallons daily for cooling; estimates put some data centers at up to about 5 million gallons per day and industry forecasts show U.S. annual consumption could rise to hundreds of billions of liters in the coming years—numbers that translate into real pressure on aquifers and surface supplies where centers cluster [7] [10]. Analyses also emphasize indirect water use: water consumed by thermal power generation that supplies the grid can exceed on‑site cooling withdrawals by an order of magnitude, multiplying regional impacts in basins that feed both power plants and data centers [11] [12].
4. Documented local impacts: stress spikes, infrastructure strain and civic pushback
Reports quantify basin‑level stress increases—Ceres finds data‑center growth could raise water stress in strained basins up to roughly 17% (and other analyses cite figures up to ~32% in Phoenix if all planned builds proceed)—while Reuters and local reporting chronicle community opposition (Tucson, Phoenix) and a shift in project designs after public outcry [5] [6] [8]. Additional consequences include the need for expanded water distribution lines and pressure on aging treatment and delivery infrastructure, which multiplies costs for municipalities and can pit data‑center growth against farmers and residents [13] [5].
5. Responses, trade‑offs and contested fixes
Industry and regulators are responding: companies are piloting closed‑loop and zero‑evaporation designs and waterless cooling, and regulators (notably the European Commission) are preparing minimum performance standards for data‑center water use—yet trade‑offs remain, as air‑based (waterless) cooling typically raises energy consumption and thereby shifts impacts to electricity systems and their water footprints [8] [14] [2]. Analysts and investors therefore urge holistic risk assessments—counting direct withdrawals, indirect power‑sector water use and clustered growth patterns—because technical fixes alone do not erase basin‑level scarcity or the political fallout documented in multiple reports [3] [15] [10].