Data center water spikes could cost billions

A study by a University of California, Riverside research team in collaboration with Caltech found that community water systems across the United States will need billions of dollars in new infrastructure to meet spikes in data center water demands during peak usage. The research estimates the cost of the required water infrastructure at 10 billion to 58 billion dollars, depending on the rate of data center growth. That projection assumes enough water will be available, said Shaolei Ren, an associate professor in UC Riverside's Bourns College of Engineering, who led the study. Without new water efficiencies, data center cooling systems four years from now could require 697 million to 1.45 billion gallons of additional peak water capacity per day. The volume is roughly equal to the typical daily water supply of New York City. Even with optimistic water use reductions, the new capacity could rival the supply to half of New York City for most of the year. The demands stem from evaporative cooling systems used to keep millions of servers cool in warehouse sized data processing centers. On hot summer days, a large data center can withdraw more than a million gallons of water per day. Some facilities under construction have been allocated up to 8 million gallons daily. In February 2026 alone, three major technology companies announced they had secured multi million gallons of water per day for projects in Virginia, Louisiana and Indiana. The total water infrastructure cost for those projects is approaching 1 billion dollars. Meeting peak demands will require municipal utilities to build water treatment plants, storage reservoirs, pump stations, transmission pipelines and wastewater treatment capacity. Such improvements come as many public water systems are aging and financially constrained, the report says.