Artificial intelligence's rapid expansion is fueling a growing debate over the environmental impact of the data centers powering the technology, with water use emerging alongside electricity demand as a major point of contention among environmentalists, tech giants, and citizens.

As AI companies race to build new infrastructure, Google, Amazon, and Microsoft have launched new initiatives highlighting water replenishment projects, recycled-water systems, and more efficient cooling technologies.

Nvidia, the world's leading AI chip maker, also said this week its latest generation of chips could significantly reduce water consumption.

"The growing conversation about water and energy use by data centers has forced these companies to scramble, to rethink what they're doing and to become more transparent about what they're doing," Peter Gleick, co-founder of the Pacific Institute, told Axios.

"They're starting to understand the reputational risk of the massive rollout of data centers that have big energy and water footprints."

The industry's response comes as a new report released earlier this month from the United Nations University Institute for Water, Environment and Health (UNU-INWEH) warns that AI's environmental impact extends well beyond carbon emissions.

The report projects that by 2030, AI-powered data centers will consume 945 terawatt-hours of electricity annually, nearly triple the combined annual electricity use of Pakistan, Bangladesh and Nigeria.

"What surprised us most is how often the choices that look greenest from a carbon perspective end up worse for water or for land," Miriam Aczel, the report's lead author, said in a press release.

"If we keep judging AI sustainability by carbon alone, we might think that renewables make AI infrastructure clean, but that is solving one problem while creating other problems, often in places that didn't ask for it."

The report found that large data centers can consume up to 5 million gallons of water per day for cooling, raising concerns in drought-prone regions.

It cites examples in Queretaro, Mexico, where rapid data center development could strain limited water supplies, and Uruguay, where plans for a water-intensive data center prompted protests during a severe drought after residents questioned prioritizing industrial demand over drinking water.

Even experts who say overall water consumption remains relatively modest compared with other industries, such as beef and construction, caution that local impacts matter most.

"The projections for water demand are not eyebrow-raising," said Sarah Porter, director of the Kyl Center for Water Policy at Arizona State University.

She added that concerns over water are often "a substitute for concerns people have for this fast-developing industry."

Still, both Porter and Gleick warned that aggregate statistics can mask localized effects.

"The important point is, how much water does a data center use in the region where it's taking the water from?" Gleick told Axios.

Water and energy use are closely linked.

Water-based cooling systems generally consume less electricity than air cooling, while much of a data center's total water footprint comes indirectly through electricity generation.

Public concern is growing.

A Gallup survey conducted in May found about 70% of Americans oppose building data centers in their communities, with water and electricity use ranking equally among their top concerns.

That pressure is increasingly influencing policymakers. U.N. Secretary-General António Guterres this week called for greater transparency, saying: "I am calling on every major AI company to measure and publicly disclose the full environmental impact of its systems, carbon, water and land footprints."

Industry developers acknowledge the shift in public opinion.

"However, the court of public opinion has spoken loudly that consuming water for cooling on data centers is no longer an acceptable method," Aaron Bilyeu, chief development officer of Cloverleaf Infrastructure, said.

Beyond environmental concerns, the U.N. report warns AI infrastructure could deepen global inequality. As of 2025, only 32 countries host AI-specialized data centers, with 90% of global capacity concentrated in the United States and China.

"The concentrated development of AI infrastructure in the privileged areas of the world is creating a large digital divide that poses profound challenges in the equitable development of AI," United Nations University Rector Tshilidzi Marwala told Time.

"AI can certainly advance prosperity and human well-being. Whether it does so equitably is now a governance question, not a technical one."

The report calls for governments to strengthen permitting requirements, environmental impact assessments, and community consultation to ensure AI development accounts for water, land, and carbon impacts.

"We have a narrow window to ensure that the backbone of the technological revolution of our era develops within planetary limits," said Kaveh Madani, director of UNU-INWEH.