FW: The Business Journals: Americans were already fighting over water. Then came data centers.
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From: Mark Woodall <woodal...@gmail.com>
Sent: Tuesday, April 7, 2026 8:33 AM
To: Neill Herring <neillh...@earthlink.net>
Subject: The Business Journals: Americans were already fighting over water. Then came data centers.
By Andy Medici – Senior Reporter, The Playbook, The Business Journals
Apr 6, 2026
Listen to this article8 min
Story Highlights
What’s This?
- San Marcos, Texas, rejected a 200-acre data center rezoning due to severe drought conditions.
- Water concerns now dominate data center debates across the western and Great Lakes regions.
- Local governments have proposed moratoriums on data center developments.
Earlier this year, city councilors in San Marcos, Texas, rejected plans to rezone a 200-acre site that was slated to become a data center.
Among the biggest objections: water.
San Marcos is in a Stage 3 drought, with houses allowed to irrigate their yards only one day every other week, while home car washing, filling swimming pools and washing impervious surfaces are prohibited, according to the city website. During a city council meeting, the word “electricity” was spoken 22 times across the marathon, eight-hour session, while the word “water” was spoken 393 times and "drought" was said 44 times, according to a review of the proceedings by The Business Journals. The word "jobs" came in at 93 mentions.
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“San Marcos residents can’t drink data,” said Denisce Palacios, a community organizer and Texas state lead for Climate Cabinet, a nonprofit focused on elections with an outsized climate impact.
While the debate over data centers fueled by artificial intelligence demand rages nationwide — with local governments increasingly blocking development of the projects — the focus on water use is coming to the fore. That's because Americans as a whole are more concerned about water use now than during past data center buildouts, and AI firms are pushing to expand at a time when Americans are bristling at current or potential shortages.
“Yes, the backlash is primarily a timing problem,” said Arif Gasilov, a partner in sustainability and ESG strategy at the Gasilov Group. “The previous waves of data center construction in the 2000s and 2010s landed in a different water politics environment, where drought wasn't a permanent feature of the western U.S. conversation the way it is now.”
South of San Marcos, residents in Corpus Christi, Texas, are grappling with a five-year drought and visibly drained reservoirs that could mean at least a partial shutdown of the refineries that operate out of that city's port.
To the west, Phoenix is heavily dependent on water from a Colorado River that's in the midst of of a chronic shortage, leading to decisions about who gets the water that is available — and how much of it. Nearby Tucson is in the same proverbial boat, even if that boat has run aground on dry land.
Las Vegas, San Diego, and Salt Lake City are staring down similar water issues, keeping the subject front-of-mind for voters, whose focus is on the real-world impacts of such shortages and less about conservation as a whole.
But as tech firms — led by the lineup of so-called hyperscalers like Google, OpenAI, Oracle and Meta — secure sites for data centers and obtain the energy and water they need to operate those properties, efforts by power operators and utilities providers to catch up with infrastructure often results in across-the-board rate hikes and higher fees.
In essence, the cost to expand infrastructure is becoming socialized, while those resources end up being concentrated, Gasilov said.
“It's not that Americans suddenly became environmentalists, but rather that data center operators are showing up in communities that are already fighting over water and electricity, and residents can usually see who benefits and who pays,” Gasilov said.
Impact on prices
Nearly half (47%) of the freshwater used in the United States between 2010 and 2020 was for irrigation of crops, according to the U.S. Geological Survey. Personal water use was the second biggest draw on water resources. Industrial use came in third.
In 2023, data centers accounted for 0.3% of public consumption water withdrawals nationally, according to the Lawrence Berkeley National Laboratory, but that number has tripled from 2014 levels, and energy and heat-intensive AI data centers are expected to require far more. Berkeley Lab projects the water use by hyperscale AI data centers will more than triple again by 2028.
As demand for water goes up, so do prices.
Bluefield Research’s U.S. Municipal Water & Sewer Rate Index found the average household water and sewer bill rose 5.1% from 2024 to 2025 — and it's gone up 24.2% over the past five years. Since 2000, combined water, sewer and trash bills have more than tripled, rising 207%, which is well more than the 93% increase in overall prices due to inflation during that time.
It’s not just the West and Southwest facing water issues either.
The Great Lakes region — which spans New York, Pennsylvania, Ohio, Indiana, Michigan, Illinois and Wisconsin — is also grappling with dwindling resources at a moment when AI data center demand is rapidly increasing. Illinois and Ohio are in the top five in the nation for the number of data centers in operation, according to an August 2025 report by the Alliance for Great Lakes.
With more projects on the way, there also will be more conflict, said report author Helena Volzer, senior source water policy manager for the Alliance for the Great Lakes.
“Industries like data centers and semiconductor chip manufacturing are choosing to locate in the Great Lakes region in part because of its water resources along with state laws and tax incentives that encourage investment but don’t consider limited water resources," Volzer said. "The region is simply not prepared to manage the competing and overlapping demands that may soon lead to more conflict over water resources."
Companies seek alternatives
Aware of the challenges and pushback, some of the companies building data centers have started to alter their approach. Among them, Microsoft Corp. said in a blog post in early this year that it would minimize its water use at its data centers and replace the amount those data centers use, as well as provide better transparency around water use.
Closed loop liquid cooling systems, which recirculate the same water through the cooling cycle, eliminate evaporative water use and require far less replenishment. Those systems are now being used more often, but retrofitting older facilities is capital intensive, and companies will not do it without regulator pressure, Gasilov said.
AI companies may also draw upon recycled industrial water, such as what's used by oil refineries, cement factories and wastewater facilities, which can supply large amounts of water without touching drinking or community water, said Nancy Coblenz, president of the Stellenium Corp., which creates infrastructure plans for cities.
“The technology to build responsibly already exists. The question is whether developers are required to use it, and whether community leaders know enough to demand it,” Coblenz said in an email.
Where residents are cracking down
Community leaders are pushing back.
The Business Journals identified 66 local-government moratoriums on data center developments that have been proposed or passed in the last two years, spanning from Indiana and Michigan to Georgia and Oklahoma. Even regions known for their general acceptance of data centers have cracked down on development. In Loudoun County, Virginia, part of the so-called Data Center Alley through which much of the world's internet traffic passes, the community's elected board eliminated by-right data center development, requiring special exceptions.
In Florida, Republican Gov. Ron DeSantis has proposed legislation that would allow local governments to prohibit data center construction and ban local taxpayer subsidies from them, among other measures.
These local and state legislators have found allies on the national stage. Sen. Bernie Sanders, I-Vt., said in a video posted to social media in December that AI is being aggressively pushed by the wealthiest people in America and that the process needs to be slowed. In March, he and Rep. Alexandria Ocasio-Cortez, D-N.Y., introduced the Artificial Intelligence Data Center Moratorium Act.
But part of the issue with data center developments also involves timing. Data centers often become opposed by residents simply because they are largely started without the public being aware until much later in the process, Coblenz said. That in itself creates tension and can prevent projects from advancing.
“By the time most communities learn a hyperscale facility is planned for their water-stressed city, financial and permitting structures are already in motion,” Colbenz said. “The industry too often treats public concern as an obstacle to manage rather than intelligence to act on.”