Black & Veatch: AI Data Centres Causing Water Concerns
The expansion of data centres across the US is prompting water utilities to reconsider how they will manage increasing water requirements, according to the Black & Veatch 2025 Water Report.
This report, derived from a survey of 680 stakeholders in the water sector, highlights that utilities are beginning to understand the extensive water needs of data centres, especially those that support AI operations, due to their cooling systems.
Although data centres are gaining attention within the water management sector, there remains uncertainty regarding the extent of planning for their water demands.
In fact, more than half (54%) of respondents said “no” when asked if their organisation has factored in the rise of data centres and technical manufacturer water needs into their short and long-term resource planning.
- 21% of respondents say they are seeing data centre/AI data centre activity in their area
- 50% of respondents say they have neutral policies when it comes to encouraging the building of data centres and/or technical manufacturing
- 11% say they have policies that encourage their building, 2% say they have policies that discourage their building and 37% are unsure
- 36% of respondents say that within the water authority, perception as it relates to water usage by data centres and/or technical manufacturing coming to their area is neutral - the same percentage say they are unsure
The report notes: "As data centre locations proliferate across the US, numerous communities are preemptively evaluating the potential impact on their water and wastewater systems to gauge their infrastructure's capacity."
How is water used inside a data centre?
Large-scale data centres, pivotal for powering AI technologies, require substantial water supplies to maintain cooling for critical systems.
While the technology sector is advancing towards developing cooling solutions that support innovation, there are sustainability concerns associated with higher water usage.
These data centres' increasing water demands could influence national water supplies.
As AI becomes more integral to businesses globally, data centre operators are compelled to seek more efficient ways to maintain cooling systems, thereby intensifying their water consumption.
A data centre's cooling towers can demand millions of gallons of water annually to prevent system overheating.
Water utility preparation gaps
The Black & Veatch report indicates that many water utilities are not fully aware of how data centre growth might affect water resources.
More than half of the participants (54%) acknowledged they have not accounted for the rise of data centres in their resource planning strategies.
An additional 33% of respondents were uncertain about their organisation's planning in this regard.
“As demand for technology, AI and cloud computing increases along with corresponding demand for water, water utilities can be aware of the trend and ready to engage with ecosystem players to forecast supply,” the report advises.
Despite increased attention to data centre water usage, only 14% of utilities reported direct requests from data centres.
Although the impacts of data centres are not yet fully felt, the report forecasts more significant effects in rural regions as development progresses.
"This report highlights the challenges our water clients are facing, from cybersecurity threats to aging infrastructure, AI adoption and the impacts of climate change.
"As they face these new challenges, utilities must rethink how they deliver water — advancing smarter sustainability practices, adapting to new regulations and modernizing systems to ensure long-term reliability and resilience. With AI-driven data centre growth and an increase in cyberattacks against our water infrastructure, the need for resiliency has never been more clear."
Water-positive innovation
Leading tech firms are setting ambitious water conservation goals for their data centres.
Microsoft, for instance, announced a strategy in December 2024 to implement a cooling approach that eliminates water evaporation, potentially saving more than 125 million litres annually per data centre.
These "zero-water evaporated designs" involve water circulating past heat-generating chips to transfer heat to chillers, with the water being recycled within the system.
Microsoft plans to pilot this innovative closed-loop system in locations such as Phoenix and Mount Pleasant, Wisconsin, with operational commencement in late 2027.
Other tech leaders are similarly pursuing water stewardship programmes.
Google collaborates globally to improve clean water access, and AWS utilises AI to safeguard water resources worldwide.
Moreover, Meta reported assisting in the restoration of 1.5 billion gallons of water in 2024.
Is water reuse the solution to confront rising data centre demands?
The report also highlights varied perceptions of data centre water usage.
Notably, 13% of respondents expressed negative views on water usage by data centres and technical manufacturing within water authorities and the broader community.
Meanwhile, 11% of water utilities were actively receptive to new water demands from data centres, while 2% discouraged them.
Half of the respondents viewed data centre development neutrally, recognizing the balance between economic growth and natural resource availability.
- Only 34% of respondents are “very confident” in the resiliency of their water systems, a sharp 11-point drop from 2024 (Source: Black & Veatch)
Although only 12% of utilities have noticed a rise in recycled water demand driven by data centres, this is expected to increase as data centres grow and water reuse becomes a viable cooling option.
“While the tech industry long has relied on data centres to run everything from social media to financial transactions and email, new AI technology requires ever-increasing computational power,” the report says.
“As the need for this technology grows, so does the need for data centres and the investment appetite.
“As global law firm White & Case noted in December, most technology companies have ambitious water-positive targets for their data centres’ operations and increasingly are exploring and applying technologies to reduce and minimise water usage.”
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