Why data centres must rethink water use

As the Australian Government rolls out new national expectations for data centres and AI infrastructure developers — including responsible water use — scrutiny has sharpened on how the digital backbone of our economy manages this precious resource.

Industry leaders have broadly welcomed these expectations, acknowledging that sustainability, innovation and investment are vital for growth and national interests. Yet, as Data Centres Australia notes, meeting high standards for water efficiency isn’t optional; it’s essential to maintain public trust and secure the licence to grow.

Every time we stream a video, join a virtual meeting, or use an app, we rely on data centres. As demand for digital services grows, so does their footprint.

While much attention is paid to energy use, another critical resource is quietly consumed: water. In a world of increasing freshwater scarcity, we must balance digital innovation with responsible water use.

The cooling conundrum

Data centres run 24/7, generating intense heat, and cooling systems have the greatest impact on the environment.

Operators face a trade-off between energy and water use. Air-cooling avoids water consumption and suits drought-prone areas but uses more electricity. Evaporative cooling is more energy-efficient but relies heavily on water.

There is no single solution. Facilities must be designed around local environmental conditions, reflecting the realities of each community.

Measuring the trade-off

The industry relies on two key metrics: power usage effectiveness (PUE), which measures how efficiently a data centre uses electricity, and water usage effectiveness (WUE), which measures how much water is used for cooling compared to the energy consumed by the IT equipment.

These two metrics must be considered together.

Reducing water use by shifting to air cooling can drive up energy demand. Reporting only one metric risks obscuring the true environmental impact. Transparency across both is essential.

For example, at Equinix we report two different WUE figures: one for our entire data centre portfolio and one exclusively for data centres that use evaporative cooling. In 2024, the last year for which complete statistics are available, these figures were 0.95 and 1.55, respectively.

Moving beyond drinking water

Less than 1% of the Earth’s freshwater is easily accessible. Using high-quality drinking water for cooling is no longer sustainable.

Reclaimed water offers a viable alternative. Treated wastewater, delivered via separate ‘purple pipe’ systems, is well suited for industrial cooling. However, regulatory barriers often prevent its wider use. Updating these frameworks is critical.

Desalination is another option, but it is energy-intensive and can harm coastal ecosystems if not carefully managed. While useful in some contexts, it is not a universal solution.

A sustainable digital future

As the digital economy expands, data centres must stop treating water as an abundant, low-cost resource.

Operators need to assess local water stress, adopt transparent reporting, and invest in alternative water infrastructure in partnership with government and utilities.

A connected future does not have to come at the cost of our water resources. With smarter, localised design and greater use of reclaimed water, the sector can support digital growth while protecting communities and the environment.

Image credit: iStock.com/imaginima