The Data Center Water Problem Is Soluble
Updated: Sep 19
ITIF Report | July 6, 2026
Technology exists, and policy instruments are available, to develop a new, state-led model of water governance for data centers and other large industrial users. What’s missing is institutional coordination, regulatory specificity, and a set of standardized mechanisms and metrics.
KEY TAKEAWAYS
Data centers consume water both directly for cooling and indirectly by generating electricity. Indirect consumption is more than 10x direct consumption, but overall, data centers account for a very small fraction of total U.S. consumption.
New technologies now make it possible to consume almost zero water directly for data center cooling. They are a bit more expensive, but close-to-zero water consumption is possible. Some hyperscalers are adopting zero-water designs.
Indirect consumption is more challenging. Water use for power generation depends on the choice of power technology (e.g., gas consumes much more water than solar does) and on the local climate. But water use for power can be managed where that’s needed.
There is no national water shortage, but there are significant shortages in arid regions such as Arizona, and in drought-stricken areas such as California. Each watershed has different water capacity and different existing users.
Water consumption is regulated by the states, not the federal government, so policy must be driven by state regulation, focused on specific watersheds.
States should require all large industrial users to disclose water-use data. Water use should be tied to performance standards rather than adoption of specific technologies. And water and electricity regulators should develop joint review protocols.
The federal government should expand R&D for low-water-use electricity, develop standard metrics for water consumption, and use procurement levers to encourage water savings where appropriate. Federal water-use mandates unnecessary.
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