Data Center in Indiana: Indiana University
States that welcomed AI data centers with open arms now confront a harsh reality: their water supplies can’t keep pace.
The problem is simple but severe. These facilities consume enormous volumes of water to cool their operations—primarily the processors that power AI chips. While some states were already water-stressed before data centers arrived, other regions now face a different crisis: inadequate water infrastructure, limited water storage capacity, and insufficient groundwater to meet surging demand.
What looked like an economic opportunity just a short time ago, may become – if we are not careful - a looming resource crisis.
Below are the five U.S. states most vulnerable to water shortages caused by AI Data Centers.
1. Texas faces severe water challenges ahead. The state’s data centers already consume over 50 billion gallons of water annually, with individual facilities using as much as 4.5 million gallons per day. This strain comes as parts of Texas struggle with unreliable water access, recurring droughts, and aging water infrastructure.
2. Arizona’s water crisis has reached a critical point. The state depends heavily on underground aquifers that are depleting rapidly. At the same time, population growth has led developers to demand more water for new commercial and residential projects. Meanwhile, AI companies argue that Arizona is ideal for data centers because solar power can reduce energy costs and water consumption. However, with groundwater reserves shrinking and persistent water shortages, the state faces an uncertain future when it comes to developing these data centers.
3. New Mexico has advantages over Texas and Arizona due to its smaller population and slower growth rate. However, AI data center developers have recently targeted the state for expansion. State lawmakers are concerned because New Mexico’s water system is fragile and the state has limited funding for new water infrastructure. As a result, proposed data center projects face intense scrutiny from regulators.
4. Utah is a growing data center hub, but faces limited water sources, recurring droughts, and a shrinking Great Salt Lake due to droughts—suggesting data center expansion may soon be unsustainable.
5. California already hosts numerous large data centers, but the state swings between climate extremes: torrential floods such as occurring now, the start of 2026 and severe drought the next. This boom-bust water cycle repeats every few years, creating dangerous unpredictability.
With data centers consuming millions of gallons daily, the state’s volatile climate makes long-term water planning nearly impossible.
🧭 Big Picture
The challenge is real but solvable. Meeting the water needs of AI data centers, businesses, agriculture, and residents doesn’t require us to choose winners and losers — it requires us to use water smartly and more efficiently.
Water efficiency refers to long-term reductions through smarter use: consuming water only when and where truly needed, eliminating water waste at every point, and deploying technologies such as waterless urinals that do not need water at all.
The path forward:
For policymakers: Enact clear water efficiency standards for all new data centers and create strong incentives for upgrading older facilities to reduce water usage.
For tech companies: Invest in advanced cooling technologies, such as liquid immersion cooling and air-cooling systems, to dramatically reduce water consumption.
For communities: Support and seek funding for infrastructure improvements to prevent water loss and ensure adequate storage capacity for future demand.
For all of us: Explore new ways to reduce or eliminate water consumption. The U.S. can meet this challenge—but only if we act now, together, before water scarcity forces very difficult choices.
-Klaus
