Data centres use vast amounts of water – here’s how we advance water circularity

As digital infrastructure expands, data centres are becoming the backbone of modern connectivity, powering everything from cloud services to artificial intelligence (AI). Yet this growth carries a hidden environmental cost beyond its energy use: rapidly rising water consumption.

Cooling alone requires vast volumes of water and AI workloads are set to intensify this demand.

Recent estimates suggest that accelerated AI adoption alone could result in an additional 4.2 to 6.6 billion cubic metres of water withdrawal by 2027, including onsite cooling and offsite electricity generation. This projection is equivalent to four to six times the annual water withdrawal of Denmark, underscoring the need for urgent action.

The opportunity lies in circular water management strategies, which can deliver up to 75% water savings. Solutions can range from water optimization, such as advanced liquid and closed-loop cooling solutions in data centres and replenishment, offering the potential to address water scarcity and energy efficiency challenges.

Yet, implementation is often delayed when business cases are lacking, monitoring is insufficient and because integrating new technologies into existing infrastructures is complicated. Overcoming these barriers requires collaboration.

By partnering with technology providers, startups and local communities, circular water management solutions can be scaled, enabling data centres to operate more sustainably while safeguarding freshwater resources.

Water optimization focuses on minimizing the actual water usage of data centres through smart water management systems that continuously monitor and adjust water usage, alongside innovative and less water-intensive cooling methods.

Smart water management systems are built on real-time sensors and track and adjust consumption according to cooling demand. This proactive approach enables predictive modelling and precise understanding of water needs, achieving up to 25% less water consumption by optimizing algorithms that pre-empt and adjust water-based cooling.

With these systems in place, data centres are well-positioned to implement advanced liquid and closed-loop cooling solutions, such as liquid immersion and direct-to-chip cooling.

Liquid immersion cooling involves submerging electronic components, such as servers or central processing units (CPUs), in a non-conductive liquid that efficiently absorbs their heat and transfers it to a heat exchanger.

Compared to traditional methods, this can reduce water consumption by up to 91%, energy consumption by 50% and space occupancy by 85% when compared to conventional air cooling methods.

One of the latest innovations is direct-to-chip cooling, targeting processors at the source. By circulating dielectric coolant across the processor’s cold plate, it absorbs heat directly, maintaining optimal processor temperature, thereby minimizing overheating and excessive water consumption in the cooling process.

This innovation can reduce water consumption by 20-90% in water-scarce regions and decrease facility power needs by 18%, depending on the technology and climate. The water savings potential varies by system design, with server-level cooling offering greater benefits than facility-level approaches.

With Microsoft already deploying closed-loop liquid cooling, Carrier investing in direct-to-chip cooling technology, and Ecolab’s recent launch of a cooling monitoring solution for direct-to-chip cooling, the momentum behind advanced liquid cooling solutions is clearly accelerating.

Beyond their four walls, data centres can also play a key role in replenishing water in regions where they operate. While water optimization reduces consumption, replenishment focuses on restoring water sources by enhancing water availability and quality ensuring local communities have access to clean water.

Key strategies include wastewater treatment and reuse – ideally within the same watershed as withdrawal – for irrigation and industrial processes, recharging groundwater reservoirs and conserving water via efficient irrigation practices, amongst many others.

Orange County, California, is a leading example of a community that recycles wastewater to produce 130 million gallons of drinking water daily, enough for approximately 1 million residents. Major cloud providers are also advancing water-positive initiatives, such as Microsoft and AWS (Amazon Web Services) investing in water replenishment in water-stressed regions.

Data centres are increasingly adopting wastewater treatment and reuse strategies to reduce their reliance on freshwater resources, resulting in up to 50% lower water consumption. Indra Water and Kilimo are two examples of prominent innovators helping industries achieve water replenishment.

Based in India, Indra Water leverages patented technology to treat industrial wastewater, which involves passing electricity through pollutants to break down their chemical bonds.

This technology is significantly more effective than traditional chemical treatment and can achieve up to 95% wastewater recovery and 74% lower net carbon footprint with zero chemical usage in the primary treatment of wastewater.

Indra has successfully treated more than 4 billion litres of wastewater and is on course to treat nearly 100 million litres a day going forward.

By partnering with local organizations, data centres can better understand water challenges and design collaborative solutions. One example is Kilimo, a pioneering agritech startup that provides farmers with AI-powered water management tools, enabling data centre operators to engage effectively with agricultural stakeholders.

With AI, Kilimo analyses real-time data on weather, soil and crop needs, optimizes irrigation systems and ensures farmers use only the necessary volume of water. This precision irrigation technology conserves water, relieves pressure on local water sources and supports ecosystem recovery and improved soil health.

By partnering with corporates, Kilimo extends access to its technology to farmers, addressing watershed-level scarcity while strengthening community ties.

With over 2,000 farmers benefiting and 30 million cubic meters of water conserved across seven countries, Kilimo demonstrates the power of water replenishment solutions in addressing water scarcity and promoting water-efficient agriculture.

While data centre operators continue to make significant progress in circular water management practices, a more ambitious approach is essential to meet the rising demand for digital services and the water challenges these bring.

A shift from incremental changes to comprehensive, circular data-driven water strategies built into digital infrastructure design is needed – not just for compliance but as a strategic necessity for ensuring a sustainable digital ecosystem.

A key lever will be collaboration across the entire value chain. Hyperscale operators, technology providers, startups and local communities must move beyond isolated pilots and work together in innovation ecosystems where shared infrastructure, knowledge and investment can accelerate adoption and deliver a greater collective impact.

By forming effective partnerships, stakeholders can scale promising circular water management strategies for data centres – such as advanced liquid cooling and closed-loop solutions – and advance both water optimization and replenishment that require joint action across the ecosystem.

The Circulars Accelerator Network, a partnership between Accenture, the World Economic Forum and UpLink, aims to accelerate circular economy innovations, alongside partners such as Ecolab, Anglo American and AWS.

Over the course of 2025, the World Economic Forum’s Nature Positive Transitions initiative is working to address these challenges, identifying the priority actions technology companies can take in collaboration with other actors to reduce their impacts on nature, driven by water and energy use, pollution and land-use change.