Tech Companies Confront Water Use Concerns in Data Center Development

On Monday, SpaceX revised its prospectus for the upcoming initial public offering to note that water conditions—including scarcity, regulatory limits, and drought—could restrict the development of new data centers. The amendment marks the first explicit acknowledgment by a major tech firm that water availability may become a material factor in expanding its computing infrastructure.

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Data centers generate substantial heat from densely packed server racks. A common mitigation method is evaporative cooling, which circulates fresh water through heat exchangers; the heated water then evaporates in external cooling towers. This approach can lower electricity consumption by reducing reliance on energy-intensive pumps, but it also creates a sizable water footprint.

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A recent Gallup poll indicates that 70 % of Americans oppose the construction of new data centers, with water scarcity identified as the leading resource concern. The poll reflects growing public scrutiny of the sector’s environmental impacts, particularly in regions already experiencing limited water supplies.

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The scale of water use is illustrated by Google’s Council Bluffs, Iowa, facility, which employed more than 1 billion gallons of water in 2024 through evaporative cooling. Lawrence Berkeley National Laboratory projected in a 2024 report that, if hyperscale data centers continue to rely heavily on evaporative cooling, total consumption could reach up to 33 billion gallons annually by 2030. While this volume is comparable to water use in agriculture or oil-and-gas extraction, it poses heightened risk where municipal water demand peaks during summer months.

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The convergence of high summer cooling loads, municipal water stress, and heightened public opposition creates a scenario in which water availability could constrain site selection and operational planning for new facilities. Companies that depend on evaporative cooling may need to adopt alternative technologies, invest in water-recycling systems, or locate data centers in regions with more reliable water supplies.

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SpaceX’s prospectus amendment explicitly states that “water conditions—including water scarcity, regulations around water, and drought—could constrain data center development.” Other technology firms, though not quoted directly in the source, have publicly pledged to address water-use concerns, signaling an industry-wide effort to mitigate perceived risks.

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The available data present a mix of concrete usage figures (e.g., Google’s 1 billion-gallon consumption) and forward-looking estimates (e.g., LBNL’s 33 billion-gallon projection). The sources do not provide comprehensive, real-time water-use metrics for the broader data-center ecosystem, leaving uncertainty about actual consumption trends across the industry.

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Regulators may scrutinize water-use disclosures as part of environmental review processes for new data-center projects. Companies are expected to refine water-management strategies, explore less water-intensive cooling technologies, and increase transparency around water consumption to address both regulatory and public concerns.

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