Researchers warn of AI, data centers’ water impact

Pennsylvania Gov. Josh Shapiro recently unveiled his 2026-27 budget proposal, and included an initiative to ensure data center development projects meet strict water conservation requirements.

Shapiro’s call comes on the heels of bills in Georgia and Oklahoma, where legislators called for a moratorium on new data center development until their impacts on power, water and communities can be further studied.

And two new research reports have warned about the potentially catastrophic impacts of data centers and artificial intelligence on water supplies, including unsustainable demand and higher levels of water insecurity, while calling on policymakers to do more to protect this limited natural resource.

One report from Xylem, a water technology company, found that water demand driven by all facets of AI — cooling at data centers, power generation and chip fabrication — will grow by 129% by 2050, which is around 30 trillion liters of water each year. And separate research from the British Standards Institution and water efficiency nonprofit Waterwise found that the explosion of data center development threatens even greater water insecurity, especially in the United States where such projects are accelerating.

Both reports called on governments at all levels to promote policies supporting it  water sustainability, upgraded infrastructure and more efficient use of this important natural resource, including through better use of advanced water technology.

“[AI is] coming on top of an already stressed ecosystem,” said Matthew Pine, Xylem’s CEO. “The good news is we have a lot of technology to solve the problems… We have the means to go do it, and financially it's very viable to go do it in a lot of cases.”

BSI and Waterwise found that the U.S. has a high level of water insecurity and has yet to introduce many water efficiency policies, while at the same time data center development is set to explode this year. It’s a similar story in the power sector, which is seeing similar strains and leaving local leaders concerned. BSI noted that while some states are considering water efficiency policies and initiatives, a national effort is not yet forthcoming.

Xylem’s research found that the growth in water demand is because of the rapid growth in AI technology; the fact that data centers and semiconductor fabrication labs tend to cluster in water-stressed regions; climate change making the water cycle more volatile; and aging infrastructure making the existing system weaker.

The company said policymakers and water utilities can help ease some of the burden by fixing the leaks that plague their systems and result in thousands of gallons of lost water. And using smart infrastructure can help, as well as encouraging water reuse. Xylen found that currently just 6% of wastewater is treated and reused, and that presents a big opportunity. BSI said planners must design for future demand, too, which will only increase.

“What we do in the next three years, we'll have to live with the next 30 or 40 or 50, so we need to make sure that we are designing not just for today's capacity, but something that's going to be sustainable through the intended life of these facilities,” said David Mudd, BSI’s global head of digital trust assurance.

Some local leaders are pushing back on data center developers and getting significant concessions, however. During the U.S. Conference of Mayors’ Winter Meeting in Washington, D.C. last month, Lansing, Michigan Mayor Andy Schor said the company Deep Green wanted to build a small 26-megawatt data center on the edge of the city’s downtown.

In return, the city got the company to pledge not to pull out of the state’s aquifer but instead create a closed loop that means it’s “not taking any more water than the local fast-food restaurant,” Schor said. They also pledged to build their own renewable energy generation.

“I think we as cities can set the standard, and they want to be in our cities, so I think that if we can set the standard, they're going to comply with that and it can be a win,” Schor said during a press conference at the USCM meeting. “[When] it comes to the legitimate issues of neighbors and residents, it's our duty…this is what we do.”

Policymakers working together and with data center developers to ensure a sustainable water supply is crucial, Pine said.

“We can solve these problems,” Pine said. “We have the technology. I can say it's not a big deal, but there's a lot of collaboration work to go get it done. But we can solve the problem.”

It may also require a fundamental rethinking of how technology is powered and the expectations we have in the modern world, Mudd said.

“We're going to have to stop thinking about data storage and data processing as something we get for free, and start thinking right at the front end how we specify AI solutions, how we design the software, how we use data, how we store and keep data as a precious resource rather than something we can just take for free and chuck it all at the data centers,” he said. “Going forward, that's going to be critical, working through that.”