Hyperscale data centres and water stress in arid regions

Hyperscale data centres and water stress in arid regions | Photo: Ganapathy Kumar

The rapid expansion of hyperscale data centres has become a defining feature of the global digital economy. Cloud computing, streaming, and artificial intelligence are now embedded in everyday life, yet the physical infrastructure enabling these services is placing growing pressure on finite natural resources. Among the most acute concerns in 2026 is water, a resource increasingly strained by climate change, population growth and competing industrial demands. Nowhere is this tension more visible than in the deserts of the American south west, where digital ambition meets hydrological reality.

Why hyperscale water use has become a sustainability issue

Hyperscale data centres require vast quantities of water to keep servers within safe operating temperatures. A single large facility can consume up to five million gallons per day at peak demand, while the US average for hyperscale operations stands at roughly 550,000 gallons daily, equivalent to around 200 million gallons annually. These figures are rising as artificial intelligence workloads intensify.

New AI focused chips, including those produced by Nvidia, deliver unprecedented computational power but generate far more heat. This has pushed cooling systems to their limits. In 2024, the most water intensive facility operated by Google consumed close to one billion gallons in a single year. Nationally, US hyperscale facilities are projected to use between 16 and 33 billion gallons annually by 2028, a scale that has drawn the attention of regulators and civil society.

Arizona as a case study in localised pressure

The Phoenix metropolitan area in Arizona has emerged as a magnet for data centre investment, thanks to cheap land, favourable tax policies and proximity to fibre networks. Yet the region’s water balance is precarious. Direct on site cooling for data centres in the Phoenix area accounts for an estimated 385 million gallons per year. Far more significant is indirect consumption, with approximately 2.9 billion gallons used by power plants to generate the electricity required to run these facilities.

Agriculture remains the dominant water user in Arizona, accounting for roughly 72 per cent of total supply. While data centres represent less than 0.1 per cent of statewide consumption, their demand is highly concentrated. Community groups describe them as giant soda straws drawing intensely from specific aquifers, the same underground reserves that supply farms and drinking water.

These aquifers are already depleting at alarming rates. As surface water allocations tighten, reliance on groundwater has increased, triggering regulatory scrutiny and local opposition. Residents and farmers fear that unchecked industrial withdrawals could accelerate long term water insecurity in one of the driest regions of North America.

Water as a right and the regulatory response

The debate has increasingly been framed around the human right to water. Critics argue that cooling servers cannot be morally equated with supplying households, hospitals or food production. In several jurisdictions, this argument has fuelled moratoriums and legal challenges against new data centre developments.

Transparency is beginning to improve. During 2025 and 2026, lawmakers in at least eight US states introduced legislation obliging data centre operators to disclose their water consumption publicly, ending years of limited reporting. This shift has made it easier for communities to assess local impacts and hold companies accountable.

At the same time, technological responses are gaining momentum. Microsoft has begun piloting zero water cooling designs in Phoenix, aiming to eliminate evaporative losses entirely. Operators such as CyrusOne are deploying advanced closed loop liquid cooling systems that continuously reuse water with minimal replenishment. These approaches, while promising, remain costly and are not yet standard across the industry.

Balancing digital infrastructure with shared resources

The challenge facing policymakers and industry leaders is not whether data centres are necessary, but how they can coexist with environmental limits. Digital services underpin economic resilience, innovation and social connection, yet their physical footprint can no longer be treated as abstract or invisible.

Aligning data infrastructure with sustainable water management is increasingly seen as essential to broader development goals, including one closely linked to SDG 6 on clean water access. The Arizona experience suggests that without clear safeguards, local ecosystems and communities bear disproportionate risk.

For readers seeking deeper context, further analysis is available through global water risk assessments by the World Resources Institute and energy water nexus research published by the International Energy Agency. These resources underline a simple conclusion, the future of digital growth will depend as much on responsible water stewardship as on faster chips and larger servers.