Artificial Thirst: How Data Center Water Consumption Could Affect Rural Water Infrastructure

In July 2020, Amazon Web Services (AWS) purchased 56 acres of land in Gilroy, California. Five years later, the site is set to be transformed into a massive data-center. While construction has not yet begun, the project has sparked debate within Gilroy, adding to national conversation of data center construction in rural American communities.

The AWS land is zoned as M2 – General Industrial, causing the approval of the data center to bypass a public city council vote and only require the Community Development Department’s approval. This has caused community pushback from Gilroy residents over concern of public consideration and resource usage, particularly water. In response, the “Silicon Valley Resistance” filed a petition to stop the project and demand transparency regarding the project’s community impact.

The town administration posted a fact sheet detailing the data center’s projected water usage. The Water Supply Assessment projected total consumption during construction at 8 million gallons. Facility operations will use about 7.5 million potable gallons per year thereafter, until upgrades make use of recycled water treated through the South County Regional Wastewater Authority (SCRWA).

Gilroy is supplied by Valley Water (VW), pumping water from the underground Llagas Sub-basin. Projected yearly water supply for Gilroy in 2025, assuming a non-drought year, was about 3.38 billion gallons, with estimated demand for 2025 being 2.8 billion gallons. According to the California 2025 Annual Water Supply and Demand Assessment Summary Report, Gilroy had a projected zero percent surplus of water resources, meaning demand was projected to meet allotted supply exactly that year. Total projected water supply from the Llagas Sub-basin in 2025 was roughly 15.82 billion gallons, meeting a projected 15.3 billion gallons in demand across Santa Clara County. This margin of difference between supply and demand was projected to remain constant through 2045, assuming non drought years through 2045.

Seasonal water levels are an important factor, as the Llagas Subbasin is dependent on rainwater to support consistent groundwater levels. California had its first drought-free year in decades in 2025, and as of April 2026, about 35 percent of California and Nevada are experiencing drought conditions, with an additional 45 percent of both states being “abnormally dry.”  VW can minimize the impact on water supply during droughts; however the loss of water supply is inescapable.

Projected water and supply demand assuming a drought predicts a deficit of 995,150,263 gallons. Assuming a five-year drought, the EIR projects water deficits for the first three years with narrow surpluses in the final two. When appropriating for VW’s water shortage contingency actions, VW is projected to maintain a water surplus between roughly 10 million to 270 million gallons. On these bases, the Gilroy Community Development Center Department concluded the data center would not strain water resources, even during periods of water scarcity.

When compared to other facilities, the AWS water consumption projections look conservative. The facility requires 98 mega-watts (MW) of electricity per year, far more than most medium projects, which consume anywhere between 5 and 20 MW. While most companies don’t release water consumption data due to the current political climate around data centers, a large data center can consume 5 million gallons a day and 1.8 billion gallons a year. Based on the data reported by similar data centers, the projected electricity usage of the AWS facility could demand a level of water consumption much higher than initially reported.

Across the country, rural communities are facing similar issues with data center projects. In some ways, the expansion of data center infrastructure benefits rural America. Companies are in search of plentiful cheap land, and rural townships have reaped incredible property tax benefits data facilities.

A data center operated by Quality Technology Services (QTS) in Fayetteville, Georgia generates between $150 – $200 million dollars annually. Virginia enacted a statewide incentive to save data companies more than $130 million dollars a year. Northern Virginia features roughly 300 data facilities alone, the densest concentration in the world. Loudon County itself contains 27 million square feet of data center space and reaped almost $900 million dollars in property tax revenue in 2025. These facilities alone consumed 900 million gallons of water in 2023.

Data center expansion into rural communities also threatens to strain local infrastructure. The American Water Works Association projects that 2.1-2.4 trillion dollars are needed to meet all water infrastructure needs across the nation by 2050. A disproportionate percentage of this is required in rural areas. When examined on a per capita basis, water infrastructure needs will cost the average rural American $13,800 over the next 20 years, double the rate of urban residents. Rural communities are often too small to share the costs of major infrastructure projects, and, accordingly, utility companies won’t reinvest into modernizing and repairing systems. Federal institutions step in to fund these systems with low-interest loans, grants, and other forms of financial assistance, however this aid does not go far enough for many Americans.

The ongoing race to meet data demand sheds light on a historically ignored field of American water infrastructure – rural communities. Rural areas don’t command enough attention from the utility market to prompt private investment. This lack of infrastructure stability, combined with an increasing stress on said infrastructure, could have unintended consequences on local communities. Lawmakers in local, state, and federal assemblies must revaluate, reinvest, and modernize the infrastructure that not only feeds this growing industry but also keeps these communities alive.

Written by Owen Williams, Public Policy Intern