Tomorrow, 5 June, is World Environment Day. There is no more important part of the environment than water. Many people in the developed world take the water they use for granted. When they need it, they just turn the spigot and get water. A few years ago, analysts from WSP USA, a leading engineering and environmental professional services consultancy, predicted that in the near-future few people would take the water they need for granted. They wrote, “Climate change is altering rainfall patterns, and making both floods and drought more frequent and more extreme. To survive and thrive in the 21st century, we need to rethink our relationship with water and the way we manage this most precious of resources.”[1] They went on to explain, “A fast-growing global population demands more and more water for domestic use, and burgeoning cities are drawing increasing amounts of water from their surroundings. Under pressure to feed more people, agriculture needs more water for irrigation, while industry too consumes more water than ever. Often these sectors are already competing for a limited supply, and they are coming up against the challenge of global warming too. Rainfall is becoming even more inconsistent and unpredictable, with both mega-droughts and mega-floods becoming more frequent.”

A few months after the WSP analysts made their observations, Professor Günter Blöschl, from the Institute of Hydraulic Engineering and Water Resources Management at Vienna University of Technology, insisted that most models significantly underestimate how climate change could lead to local water crises.[2] This should make politicians at every level pay attention. As the late politician Tip O'Neill, former U.S. Speaker of the House, once noted, “All politics is local.” With the increasing use of artificial intelligence (AI), the demand for data centers has also risen, and some data centers consume enormous amounts of water and electricity. As a result, more localities oppose the construction of data centers in their backyard. These developments have a direct impact on supply chains that can’t be ignored. Supply chains have always relied on sufficient access to water and are increasingly dependent on AI — and the data centers used by AI. It will take extraordinary amounts of collaboration and innovation to work through the challenges involving water, data centers, and the supply chain.

The Current and Coming Water Crisis

“A single glass of water holds immense, often overlooked value,” write Hamed Heyhat, Chief Executive Officer at Grundfos Water Utilities, and Tania Strauss, Head of Sustainable Growth and People at the World Economic Forum.[3] They add, “It represents health, preventing disease, and sustaining life. It also represents productivity, as hydrated, healthy people work at their best. And it represents economic growth — every industry, from agriculture to energy, depends on reliable water supplies.” And Mark-Hans Richer, Global Chief Marketing Officer at Fortune Brands Innovations, observes, “Earth has a finite amount of water; only 0.5% is accessible, fresh, and usable. It’s our most precious resource, and it’s under incredible stress. Water scarcity is increasing, water quality is deteriorating, and cities and states are scrambling to address these challenges. … Water faces challenges in three key areas: climate change, infrastructure, and water waste. These issues are raising awareness and concern about the future of our water resources.”[4]

Heyhat and Strauss report, “Water’s worth extends far beyond market prices, encompassing direct uses such as drinking, irrigation and industrial; indirect benefits such as purification, flood control and carbon storage; and non-use values tied to cultural heritage and future security. In 2021, the total use value of freshwater — covering both direct and indirect uses — was estimated at $58 trillion or 60% of global gross domestic product (GDP). Indirect values, such as purification, flood mitigation and carbon sequestration, are seven times greater than direct uses, yet they remain largely absent from economic models.” In the United States, journalist Sarah Kaplan reports, “The cost of water and related services is rising twice as fast as inflation while utilities scramble to cope with escalating droughts and more intense storms.”[5]

The Data Center Crunch

The ironic thing is that artificial intelligence can help address water challenges. AI, however, requires enormous amounts of data, which comes from data centers. And, as Clyde Wayne Crews, the Fred L. Smith Fellow in Regulatory Studies at the Competitive Enterprise Institute, reports, there is a growing “Not in My Backyard” movement when it comes to data centers. He writes, “Across the country, opposition to data centers is rampant. It is organized, growing, and bipartisan. Projects are being delayed or canceled as communities object to land use, water consumption, and electricity demand they fear will raise their rates, while also creating eyesores or traffic. Some states are even pursuing moratoria.”[6]

As Crews notes, two of the biggest reasons data centers are facing growing opposition is how much electricity and water they use. Journalist Ambia Staley reports, “New facilities across Arizona, Nevada, and Utah are demanding millions of gallons daily in a region where snowpack hit record lows and reservoirs are also low.”[7] In Utah, which is currently undergoing a prolonged drought, the NSA data center in Bluffdale consumes approximately 126 million gallons of water a year and combined two Aligned Data Centers, located in West Valley and West Jordan, combined use approximately the same amount of water as the NSA data center. Remarkably, Utah politicians have approved a new data center in Box Elder County. The Box Elder data center is projected to use twice the amount of electricity required for use by the rest of the state.

Crews points out, “Resistance is understandable if costs are being imposed.” He also notes that many of the communities opposing data centers, like those in Utah, “are deeply reliant on what those facilities produce.” Technology is one of Utah’s most economic important sectors thanks to the district known as Silicon Slopes. Crews adds, “The modern economy is not optional. Streaming, remote work, financial systems, AI tools depend entirely on the physical infrastructure of server farms and the electricity that powers them. No data centers, no cloud. No cloud, no modern economy.” Nevertheless, environmental scientist Em Rose insists water usage by data centers is a big problem. She explains, “As the world grapples with water scarcity and the impacts of relentless advances in technology, the debate over the impact of Big Data in water management is one of critical importance. Data center water usage is still under-measured and under-reported, and while big data and machine learning hold immense potential to address our water woes, the surging water footprints of tech giants demand scrutiny and accountability, as a matter of urgency.”[8]

Water, Data Centers, and Supply Chains

While I’m sure that supply chain professionals would love to steer clear of the debate about data centers and water usage, that’s not possible. Supply chain journalist Nick Bowman explains, “Around the world, factories and farms are confronting a new reality: More frequent shortages of water are now capable of throwing supply chains into chaos as quickly as any tariff or transport shock.”[9] He adds, “Water risk touches virtually every part of the world's most crucial supply chains. … Concerns have mounted over the added environmental stress created by AI data centers as well. ... Together, U.S. data centers consume a combined 449 million gallons of water daily, as well as 163.7 billion gallons each year.”

Although pointing fingers elsewhere when it comes to water usage may make supply chain professionals feel better, the truth is that the supply chain needs to mind its own house as well. Patricia Calderon, Climate and Nature Economist at FAIRR Initiative, explains, “Supply chains are the knots which tie our global economy together. But they are coming apart rapidly due to climate change and the reckless abandon with which we treat the world’s finite resources It’s down to large companies with the biggest water impacts to take immediate action, working with their suppliers to stem the tide of water risk.”[10]

Concluding Thoughts

For millennia, water has been considered a free resource and people have primarily paid for the infrastructure it takes to deliver water where and when it’s needed. It’s time people take into account the true value of water. Heyhat and Strauss assert, “Valuing water is the foundation of water resilience; investment in water is the key to unlocking that value.” Our future depends on it. AI can help address water usage across the spectrum of users from consumers, to industries, to data centers to supply chains. As Richer notes, “The water bubble is a looming and often underestimated threat. If it bursts, the consequences will be far reaching, affecting our health, food supply, and the planet’s biodiversity. To make a difference, a wide-reaching effort is needed.” There is no better time to start than on World Environment Day.

Footnotes

[1] WSP, “The New Shape of Water: Adapting to Climate Change,” CSRwire, 2 September 2022.

[2] Vienna University of Technology, “Water crises due to climate change: More severe than previously thought,” Phys.Org, 2 February 2023.

[3] Hamed Heyhat and Tania Strauss, “What is a glass of water worth? How financing innovation can boost global water resilience,” World Economic Forum, 20 October 2025.

[4] Mark-Hans Richer, “The water bubble is about to burst,” Fast Company, 7 November 2024.

[5] Sarah Kaplan, “Water costs are rising faster than inflation — and sending bills soaring,” The Washington Post, 13 May 2026.

[6] Clyde Wayne Crews, “The Little Red Hen goes digital: No data centers, no internet,” Competitive Enterprise Institute, 4 May 2026.

[7] Ambia Staley, “AI data centers in the American West need 7 billion gallons of water a year. The region is running dry,” Quartz, 15 May 2026.

[8] Em Rose, “Big Data has a big water problem - is AI the answer?” diginomica, 5 October 2023.

[9] Nick Bowman, “How Water Risk is Threatening the World's Supply Chains,” SupplyChainBrain, 11 December 2025.

[10] Staff, “Water Now a Major Risk for World’s Supply Chains, Says Non-Profit,” SupplyChainBrain, 26 March 2024.