Modern Water Wars: Now Compete With Data Centres To Access Water
Moody's latest report sheds light on the excessive overconsumption of water by data centres around the world to power technology like AI and cloud computing.
For years, water wars have been the stuff of geopolitical conflicts, with countries fighting over rivers, reservoirs, and aquifers. But in the 21st century, a new player has entered the battlefield: data centres.
With the explosion of cloud computing and artificial intelligence, a report by Moody's Ratings details how massive digital fortresses—owned by tech giants like Google, Microsoft, Amazon, and Meta—are consuming millions of litres of water daily, to keep their servers cool. And as the demand for AI-driven applications, cryptocurrency mining, and high-performance computing soars, so does their thirst for water—often at the expense of local communities in water-stressed areas.
This overconsumption is leading to credit risk, stated the report, especially as groundwater shortages become more prevalent around the world.
Growing Threat To Water Security
According to the report, data centres globally now use as much water per day as a small city. Hyperscale data centres, the largest type, consume an average of 2.1 million liters per day. In water-stressed regions like India, Arizona, California, and Chile, this is leading to rising tensions between local governments, businesses, and environmentalists.
In some cases, tech companies are facing public backlash. In Santiago, Chile, Moody's described how Google had to rethink its plans to build a new data center after public outcry over the city's decade-long "mega-drought."
Meanwhile, in São Paulo, Brazil, severe droughts have triggered water rationing, even as new data centers continue to be built, added the report.
Water Versus Innovation
Moody's report states that tech companies argue about investing in water-efficient cooling technologies to offset their impact. Some firms have pledged to be "water positive" by 2030, meaning they will replenish more water than they consume.
For instance:
Microsoft has introduced recycled water systems to lower consumption.
Google is experimenting with rainwater collection and new cooling methods.
Amazon Web Services is exploring waterless cooling solutions like liquid immersion technology.
However, these technologies are still in their early stages and come with their own operational and cost challenges, the report further stated. Additionally, data centers remain highly dependent on traditional water-cooled systems, especially in hot and humid regions where air-based cooling is inefficient.
Regulators Crack Down
Moody's research further mentions how governments are stepping in as the water crisis intensifies.
Singapore and Amsterdam have paused new data centre approvals to reassess water and power capacity.
Ireland's Dublin now requires detailed water impact assessments before approving any new projects.
California is considering legislation that would force data centres to publicly disclose their water usage.
While regulators push for accountability, companies are also turning to green finance to fund sustainable water management initiatives. Firms like Equinix and Digital Edge (Singapore) have issued green bonds to invest in water-efficient cooling systems and closed-loop water recycling.
The data boom is not slowing down—AI, cloud storage, and digital connectivity will only accelerate. But the question remains: can we afford to keep the digital world running at the cost of our water supply?
