Analysis Shows Most US Data Centers to Be Located in Dry Areas

As drought conditions spread across large parts of the U.S., the rapid expansion of the AI sector is increasingly colliding with concerns about water availability. A recent analysis found that most planned data center developments are slated for regions that have experienced persistent dryness during the past year, raising questions about long-term resource management. 

Data centers form the backbone of modern AI systems but require substantial quantities of water to keep servers cool. According to the analysis, roughly two-thirds of the 809 facilities currently planned across the country are located in areas that have faced drought conditions over the last 12 months. Existing centers show a similar pattern, with many already operating in water-stressed regions. 

The findings come as more than 60% of the continental United States faces some level of drought. Scientists have repeatedly linked increasingly severe and prolonged dry periods to climate change, which is being driven largely by greenhouse gas emissions from fossil fuels. 

At the same time, demand for AI infrastructure continues to surge. Large-scale data centers can consume millions of gallons of water daily for cooling purposes. Industry projections indicate annual water use from U.S. data centers could climb to 73 billion gallons by 2028 as companies race to expand computing capacity. 

Christopher Dalbom, a specialist in water resources law at Tulane University, warned that rising demand from multiple sectors is intensifying pressure on already limited supplies. He argued that expanding data center construction could accelerate competition for water in regions already struggling with shortages. 

Major technology firms, including Amazon, Google, Microsoft, and Meta have invested heavily in new facilities. Developers are often attracted to sparsely populated, dry locations because land costs are lower and tax incentives are common. However, several projects have drawn criticism from residents and environmental advocates concerned about future water access. 

In states such as Utah, Texas, and Washington, proposed developments have become focal points of debate. Critics fear that continued growth could place additional strain on aquifers and other water sources, particularly during prolonged drought periods. Farmers and ranchers have expressed concern that industrial demand may eventually compete with agricultural needs. 

Industry representatives argue that data centers consume far less water than agriculture and some other sectors. They also point to investments in efficiency measures, including closed-loop cooling systems that recycle coolant rather than relying on constant water withdrawals. However, these technologies often require additional energy, creating separate environmental considerations. 

Public scrutiny has intensified as communities weigh economic benefits against environmental costs. Several states are considering legislation that would require greater transparency regarding water consumption or impose stricter operating requirements. 

Experts say the debate reflects a broader challenge facing both policymakers and businesses: how to balance technological growth with the responsible stewardship of increasingly scarce water resources in a warming climate. 

For downstream firms like Core AI Holdings Inc. (NASDAQ: CHAI) that rely on AI in the development of their solutions and products, debates about where data centers can or cannot be located could hit closer to home because proximity to data centers is a key enabler of seamless computing power access during company operations. 

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