Arizona’s tech boom has brought jobs, investment and innovation to the desert.
But as the number of data centers multiply across the Valley, so does concern over what keeps their humming servers cool: water.
According to Data Center Map, 162 data centers now operate in Arizona, with many more planned or under construction. These massive facilities, the digital backbone of cloud computing, social media and artificial intelligence, rely on enormous quantities of water to keep thousands of servers from overheating.
In a state already straining to conserve every drop, the growth of data centers is colliding head-on with the Southwest’s deepening water crisis.
Data centers in the Phoenix region currently use about 385 million gallons of water each year for on-site cooling, according to a 2024 report by Ceres. The report also estimates that the facilities indirectly consume roughly 2.9 billion gallons annually through electricity generation needed to power their operations.
Keeping cool at a cost
“It’s one of the most pressing challenges in our region,” said Carrie Hiddenbottom, an associate professor at the University of Arizona who studies water and energy use in tech infrastructure. “Communities are worried that data centers are especially going to take all of the water and energy in those areas.”
According to Hiddenbottom’s 2022 study, "Water-Energy Tradeoffs in Data Centers: A Case Study in Hot-Arid Climates," servers inside a data center run continuously, generating immense heat that must be removed to prevent component failures. Most large-scale facilities use evaporative cooling, a process that sprays or circulates water through cooling towers to absorb and expel heat.
The method is energy-efficient, a crucial benefit in Arizona’s power-hungry summers, but it comes with a trade-off. The water used evaporates into the atmosphere and cannot be recovered. Once it’s gone, it’s gone for good.
A single large data center can consume millions of gallons of water per day, permanently removing that water from the local cycle.
Microsoft, Oracle, Meta, Lumen, and CenterSquare data centers across the Valley did not respond to requests for comment regarding their cooling methods for local data centers.
A growing thirst
Clustering water-intensive facilities in the Phoenix area has concerned planners and researchers. The region relies on stressed sources like the Colorado River and underground aquifers that run the risk of being depleted if overused.
As dozens of new data centers come online during the next few years, it could strain municipal water systems designed long before the digital economy arrived.
“The reality is, there’s so much demand, the computing needs are skyrocketing,” Hiddenbottom said. “With a lack of innovation on the infrastructure side, there’s no immediate chance coming.”
In the Phoenix area, researchers from the University of Arizona, including Leila Karimi, have analyzed the water-energy trade-off that defines how data centers operate.
Their research, “ A Case Study in Hot-Arid Climates,” compared two facilities using different cooling technologies, one air-cooled, one water-cooled, and found no perfect solution.
The data center that used air-cooled chillers consumed far less water but significantly more electricity. The data center that used water-cooled chillers and evaporative cooling consumed far less power but much more water.
The more energy-efficient a system is, the less water-efficient it tends to be, and vice versa, experts say.
“The study shows a clear inverse relationship,” Karimi said. “Saving energy often comes at the expense of higher water consumption, especially in hot, arid regions like Phoenix.”
Researchers found hybrid systems, which switch between evaporative and air cooling depending on weather conditions, offer the best compromise.
ADWR’s Douglas MacEachern said the agency’s authority extends primarily to large cooling towers, which fall under “Program Code 18” regulations.
“Such cooling towers are subject to standard conservation requirements stipulated by the management plan of the active management area where the facility operates,” he said.
Beyond those requirements, cities themselves decide how to allocate water to new tech facilities.
“Each city maintains its own diverse and robust water portfolio that includes contingency supplies,” MacEachern said. “If a city wants to build a new data center or tech facility, it is up to its discretion based on its own available resources.”
That discretion, however, means each city bears the responsibility, and potential consequences, of bringing in high-water-use industries.
In Goodyear, where several data centers have recently opened, city officials say they have worked to balance growth with water protection.
“We look at it just like a financial budget,” said Barbara Chappell, Goodyear’s water services director. “We only have so much money to go around, or water in this instance. And so we give a developer a budget for a parcel.”
Goodyear’s Water Resources Allocation Policy requires high-water users like data centers to justify their demand and fit within the city’s 100-year assured water supply plan, a state requirement for all designated municipalities.
“The policy really helps us to protect those that are here today from what might happen in the future,” Chappell said.
Ray Diaz, Goodyear’s water resources manager, added developers must file annual water reports with ADWR and stay within the city’s water designations.
“We have to show every 10 years that we have a 100-year supply of water to meet our current and future demands,” he said.
Learning from the desert
Goodyear’s water officials said many out-of-state tech companies underestimate Arizona’s scarcity challenges until they arrive.
“We spoke to them about the high cost and the scarcity costs,” Chappell said. “They were from the Pacific Northwest, so it was completely new for them.”
After learning the Southwest’s economics of water, she said, attitudes shifted.
“It didn’t take them long to see how really expensive water is out here. So they are now converting to a dry or air-cooled technology after all,” she said.
Community concerns and calls for transparency
As more data centers break ground, Valley residents have raised questions about how much water these facilities will use, and whether that information is being shared.
“When a new data center comes to the community, there is no clear, transparent communication with the community that this data center is going to use this amount of water,” Karimi said.
Hiddenbottom agreed, saying while some operators are forthcoming with audits and data, there is often pushback from communities seeking more transparency.
“Data centers are actually really open with providing us their data to basically do a water and energy audit,” she said. “But we need to be asking hard questions and standing up for the communities. We need to figure out, what are some things we can do to support our community and this critical infrastructure?”
The lure of the desert
Despite challenges, Arizona remains a magnet for data center investment. Cheap land free from potential dangers is a big draw, Chappell said.
“They look for a place that is not known for natural disasters,” she said. “They look at land costs and they look for a power grid they think will be reliable.”
The greater Phoenix area checks all those boxes: low risk of earthquakes, robust power infrastructure and ample land zoned for industrial development.
The same climate advantages that attract companies — dry, stable weather — also make cooling them more resource-intensive.
Preparing for a digital future
Data centers already consume about 5% of total U.S. electricity demand, and that figure could rise to 12% by 2030, according to Karimi. In Arizona, the ripple effect extends far beyond the grid.
“To me, water use, that’s even more important than energy,” Karimi said. “Although it’s low-cost compared to energy, its use is scary, especially in a water shortage.”
Experts agree the state must invest in more adaptive technologies and transparent policies to balance economic growth with water conservation.
“There’s not one-size-fits-all data center architecture for every community,” Hiddenbottom said. “Based on your climate type, you’re going to need a very specific data center cooling system.”
That means smarter sensors, more efficient hybrid systems, and tighter coordination between utilities and developers, before the Valley’s limited water supply is stretched too thin.
For now, cities like Goodyear, Mesa, and Chandler are banking on innovation and policy to keep pace with digital expansion. But as more global tech giants set their sights on Arizona, water planners warn that vigilance must keep up with growth.
“Cities initially didn’t have any public ordinances or policies in place to really support that growth,” Hiddenbottom said. “So they really had to scramble to meet the data centers’ needs.”
The scramble, experts say, is far from over. The Valley’s digital future may depend not just on servers and silicon, but on the ability to keep them cool without running the desert dry.
James Goldmeer Reporter | Goodyear & Litchfield Park
Meet James James Goldmeer joined Independent Newsmedia, Inc., USA, in July 2024, starting their career as a reporter in Goodyear and Litchfield Park.
Community: James grew up in the West Valley, calling Avondale home and going to school in Glendale and Peoria. Returning to the community after university, James plans to get involved in everything arts and culture, and civil rights.
Education: Northern Arizona University a bachelor's degree in Journalism, a certificate in Professional Communications, with a minor in English.
Random Fact: James spent half a year as an intern for the Arizona House of Representatives communication team, working with legislators to inform the public through press releases and social media.
Hobbies: James collects postcards and old books, reads memoirs and attends local jazz shows.
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