Data centers’ indirect water use—the water used at power plants that supply the electricity—can be far greater than the water used in the data centers themselves, writes Christopher @Mims.

AI data centers are consuming substantially more water than tech giants publicly report, with the bulk of this consumption occurring indirectly at the power plants that supply their electricity. A Wall Street Journal investigation revealed that indirect water use for data centers can be up to 12 times greater than the direct water used for cooling on-site. While companies like Microsoft, Google, and Amazon disclose only their direct water usage, Meta is the sole major hyperscaler that reports both direct and indirect figures. Lawrence Berkeley National Laboratory research supports this, indicating that 80% to 93% of a data center's total water footprint originates from electricity generation.

Google's direct water use alone increased by 34% in 2025 to 10.9 billion gallons. This figure is likely several times higher when factoring in indirect consumption, as Google is estimated to use roughly three times more water indirectly than directly. Many new and large data centers are being constructed in water-stressed areas like Phoenix, drawing on aging fossil fuel power plants or building new natural gas plants, both of which are significant water consumers. Ceres predicts that Phoenix's data center water demand could rise from 3% to over 20% of the city's annual supply by 2031, potentially rivaling residential landscaping demand in a desert region facing Colorado River depletion.

This undisclosed water risk poses a material ESG liability for investors in companies such as Nvidia, Microsoft, Google, Amazon, and Meta. Community opposition has already led to the blockage, stalling, or cancellation of $170 billion in AI data-center capacity since 2024. While Nvidia's closed-loop, zero-water cooling offers a promising solution, and Microsoft plans to implement it in all new builds by 2027, retrofitting existing facilities that use water-intensive evaporative cooling remains a costly challenge. State and local governments in water-stressed regions are beginning to impose disclosure requirements and usage caps, with 16 state attorneys general questioning the legitimacy of renewable energy credits as a substitute for actual water and emissions reductions. Future regulatory actions may include mandatory indirect water disclosure by Congress or the EPA, and potential moratoriums on new data center construction in water-stressed states.