Water use from data center cooling in the Phoenix area alone is on track to increase by 870%, from 385 million gallons a year to more than 3.7 billion gallons, according to an analysis by Ceres, the sustainability nonprofit. That growth is landing in a region where the U.S. Bureau of Reclamation projects Lake Powell inflows at 22% of average for the current water year, and the Colorado River system holds about 36% of its total storage capacity.
The collision of those two numbers captures a resource conflict now playing out across the American West. Large data centers can consume up to five million gallons per day, equivalent to the water use of a town of 10,000 to 50,000 people, according to the Environmental and Energy Study Institute. That demand is arriving in states already managing drought, declining snowpack, and fights over allocations that pit agriculture, municipalities, and tribal nations against each other.
The AI-driven land rush reshaping the American map has made electricity the primary factor in data center site selection. But water access follows close behind, particularly in the western U.S. The numbers show why energy and water planning have become inseparable.
How much water the facilities use
A medium-sized data center can consume up to about 110 million gallons of water per year for cooling, equivalent to the annual water usage of about 1,000 households. At hyperscale, the figures multiply. Microsoft $MSFT's water consumption from its operations totaled about 1.69 billion gallons in the most recent reporting year, according to data compiled by DGTL Infra. That represented a 34% increase in consumption compared to the previous year. Google $GOOGL's 15 U.S. data centers withdrew about 4.2 billion gallons of water in 2021, according to the APM Research Lab.
Most of this water does not come back. In a data center cooling context, most of the water withdrawn is consumed, with 70-80% lost to evaporation through cooling towers. The distinction matters: This water leaves the local water system entirely, unlike industrial processes, which discharge wastewater for downstream treatment.
In Utah, the Salt Lake Tribune found that the NSA data center in Bluffdale consumed more than 126 million gallons between October 2024 and September 2025, according to reporting by Grist and the Salt Lake Tribune. Aligned Data Centers used 80 million gallons in West Valley and 47.4 million gallons in West Jordan over the same period. In Newton County, Georgia, a metadata center that opened in 2018 uses 500,000 gallons of water per day, or 10% of the entire county's water consumption, according to the Lincoln Institute of Land Policy.
The drought the West is in
These facilities are spreading into a region facing record water stress. As of early May 2026, 50.90% of the U.S. and Puerto Rico and 60.92% of the lower 48 states are in drought, according to the National Integrated Drought Information System. In the West, the picture is more severe. Arizona, Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, and Wyoming all set new record-low April 1 snow water equivalent values since SNOTEL monitoring began in the 1980s, according to NIDIS. California recorded its second-lowest.
The consequences flow downhill. The Bureau of Reclamation's April 2026 study projects inflows to Lake Powell for water year 2026 at 3.87 million acre-feet, about 40% of average. Lake Mead is 32% full, and Lake Powell is 24% full, according to recent reporting. The Bureau of Reclamation has declared a Level 1 Shortage Condition on Lake Mead for 2026, requiring Arizona to cut 512,000 acre-feet of water, about 18% of the state's annual apportionment, according to the Bureau's operating conditions announcement.
In April, Reclamation announced emergency measures to stabilize the system, releasing up to one million acre-feet from Flaming Gorge Reservoir while cutting Lake Powell releases to Lake Mead by 1.48 million acre-feet. The reduced releases could cut Hoover Dam hydropower generation by up to 40% as early as this fall.
Where data centers and allocations collide
A July 2025 report from Western Resource Advocates estimated that data centers across Arizona, Colorado, Nevada, New Mexico, and Utah could use 7 billion gallons of water annually by 2035, enough to serve the annual needs of up to 194,000 people. That figure accounts only for on-site cooling needs. Ceres found that indirect water use from data center electricity consumption in the Phoenix region alone could grow by 400%, from 2.9 billion gallons to over 14.5 billion gallons.
Any water that data centers in Arizona draw from the Colorado River comes out of Arizona's allocation, regardless of where the operating company is based. That puts data center water use in direct tension with agricultural and municipal users, who are already absorbing shortage cuts.
In Nevada, the competition involves tribal water rights. More than half of the state's groundwater basins are overallocated, according to NPR. The Tahoe Reno Industrial Center outside Reno is becoming one of the world's largest data center markets, and the local water district can draw up to 325 million gallons a year from the Truckee River, according to reporting by the Mountain West News Bureau. That river terminates in Pyramid Lake, home of the Pyramid Lake Paiute Tribe, which has sued the Nevada State Engineer, Washoe County, and the federal government over overallocated water rights, according to MIT Technology Review.
Steven Wadsworth, chairman of the Pyramid Lake Paiute Tribe, told the Mountain West News Bureau that data center developers lack sufficient time horizons. "Everybody's only focused on what's going to happen this year, and the next two, three years," Wadsworth said. "And that's just not far enough to think."
Policy responses and what the numbers mean
Some communities have begun to respond. Water utilities for Mesa, Avondale, and the city of Phoenix have all passed ordinances capping usage for industrial facilities and requiring developers to purchase supplemental water supplies to exceed those caps, according to Grist. Chandler, Arizona, caps data center water use at 115 gallons per day per 1,000 square feet, and Marana prohibits data centers from using potable water entirely, according to Energy Platform News. In Tucson, resident protests led the city council to reject a proposed data center called Project Blue, after which the developer committed to a zero-water cooling system.
In Utah, a recent state law tightens permitting for large data centers, targeting facilities expected to consume over 100 million gallons per year. Western Resource Advocates recommends that states require annual public reporting of water use by data centers and mandate the use of high-efficiency or waterless cooling technologies.
The context that makes these policy moves urgent is not the water that data centers use today. Even the worst-case Ceres estimate for Phoenix would make data center usage equivalent to about 1% of the metro area's total residential water consumption. The context is cumulative: hundreds of planned facilities, each drawing from systems already under shortage declarations, in a region where the current water year has been the warmest on record for both New Mexico and Arizona. Water that evaporates through a cooling tower in Phoenix or Reno is not the water that flows to a farm, a city tap, or a tribal lake downstream.