The exact amount of water consumed by data centres is one of the water industry’s greatest conundrums. Estimates vary wildly, from very small amounts to watershed-draining quantities.
Then there is the question of whether it is ethically correct (or sound business sense) to measure only the water used within the confines of those great rectangular server cities? Some would claim it is more accurate to measure and report on the amount of water used within the entire data centre ecosystem, from microchip and energy production to post-centre treatment.
Cyrus One, a company designing, building and operating data centres for organisations around the world, has taken the latter approach.
The company’s 2024 sustainability report addressed this point directly: “We understand that no matter how much we reduce our onsite water consumption, as long as we are reliant on grid electricity, we are indirectly responsible for the consumption of large amounts of water through traditional thermoelectric electrical generation for the foreseeable future.”
This energy production use of water is now a metric against which the company’s goals are measured: “We have begun efforts to quantify this energy supply chain water consumption to understand both our full impact on water resources and the risk of electrical supply disruption due to increased water stress.”
Many ‘big tech’ companies, like Amazon, Apple and Google, report annually on their water usage and projects that reduce or offset these figures against their sustainability targets.
Salesforce has taken a water-positive approach to water with reuse schemes, such as its office in San Francisco, USA, in particular, helping to save as much as 7.8m gallons annually. In 2025, the company created its first water strategy, recognising that water is critical to the company’s future, both economically and as a resource.
It recognised that its data centres can negatively impact local freshwater supplies and that reduced availability will harm financial performance. Other considerations include the cost of treating water and potential disruptions to core office operations.
There is no doubt that new technologies, such as direct-to-chip cooling, are helping to reduce the amount of water needed to cool servers, but as the number of data centres grows and the processing power needed for AI continues to rise, so will the thirst for water. However, the water industry also relies on AI to improve efficiencies and to future-proof operations.
So, is there a way for the data centre industry to grow without severely depleting local water sources?
First, the headline figure: AI’s water demand is set to increase by 129 per cent by 2050; that’s an extra 30 trillion litres needed for power generation (54 per cent increase), semiconductor fabrication (42 per cent increase) and data centre expansion (4 per cent increase).
That’s according to a report co-produced by Xylem and Global Water Intelligence (GWI). Watering the New Economy: Managing the Impacts of the AI Revolution suggests that in 2026, as much as €1.7bn will be spent on building the infrastructure needed to meet AI demand.
Interestingly, the report suggests that this demand can be met (or offset) by improving efficiencies across the wider water network, such as by reducing the 100tn/l lost through ageing infrastructure annually. Calling for a ‘coordinated water transition, centred on water reuse, digital infrastructure, and cross-sector partnerships’, the report suggests water is best viewed as a resource upon which to build a resilient foundation for economic growth, rather than a constraint on innovation.
In a statement supporting the report’s release, Matthew Pine, Xylem’s president and CEO, said: “AI is placing new demands on water supplies, but many of the tools needed to address the challenge already exist.”
He added: “Advanced treatment technologies, for example, allow us to recycle water rather than waste it. Digital systems can help better manage supply in real time, reducing water lost to leaks. It's time for a water transition built on targeted investment and collaboration between industry, utilities, and governments to ensure water systems can support both growth and community resilience.”
US tech giant Microsoft has long held water-positive ambitions, which it reports on annually in its environmental sustainability report.
Its goal is to replenish more water than it uses by 2030. One of its recent initiatives is to build a Community-First AI Infrastructure plan, which commits the company to taking the ‘concrete steps needed to be a good neighbour in the communities’ where it builds, owns, and operates data centres. This, the company says, reflects a broad and long-term view of what it will take to run a successful AI infrastructure business.
Water forms part of a four-pronged approach, and reflects the wider sustainability targets: minimising water use and replenishing more water than used. However, the new plan focuses this commitment on the communities in which it operates. The company recognises that: “Across the country, communities are asking pointed questions about how data centres use water… These concerns are often amplified by ageing municipal water systems and infrastructure gaps.”
Before acknowledging that, ‘Local communities want and deserve reassurance that new AI infrastructure won’t strain their water resources’.
Trust is a key component of the plan: Microsoft has committed to publishing water-use data for each data centre region in the USA, as well as its progress on replenishment, in a bid to provide greater transparency over its operations' impact on local resources.
Under the plan, Microsoft also commits to investing in local water systems and water replenishment projects. Crucially, this commits the company to assessing projected data centre water demand alongside local community supply needs before shovels hit the ground. In Quincy, Washington (USA), where groundwater supplies were under pressure, Microsoft partnered with the city to construct the Quincy Water Reuse Utility. This treats and recirculates cooling water rather than relying on local groundwater, protecting the city’s potable water needs.
Data centre growth will require technology companies, cities and communities to work together to ensure all needs are met, and that costs do not fall on local ratepayers. By working with utilities and city authorities, Microsoft is also prepared to help with infrastructure projects like leak detection and pressure optimisation, reflecting the suggestions from the Xylem and GWI report, that ‘technology and environmental responsibility must advance together’.
