Data centres vs water security: What Bangladesh needs to consider

Around 300 residents of Indonesia's Batam island protested outside a compound housing data centres, carrying empty bottles and jerry cans after their household taps reportedly ran dry for three months.

Some residents said they had been forced to rely on water tankers, diverting money intended for food to buying water containers.

They blamed the expansion of nearby data centres for the shortages. Authorities, however, attributed the crisis to a prolonged dry spell and denied that water intended for households was being diverted to the facilities.

The extent to which data centres contributed to the shortage remains unclear, with reliable data on their water consumption limited.

The dispute raises a question relevant to countries seeking digital investment, including Bangladesh: when data centres compete with communities for scarce resources, whose needs should come first?

Why do data centres need water?

Data centres house servers that store information, run applications and support services such as cloud computing and artificial intelligence. These machines generate heat and require cooling to operate safely.

Many facilities use cooling towers, where water evaporates to remove heat. Some draw treated water from municipal supplies, potentially adding pressure to resources also needed by households and businesses.

However, data centres do not necessarily need drinking water. Depending on their location and technology, they can use river water, treated wastewater or seawater.

Some cooling systems return water to its source, while others consume it through evaporation. Water withdrawal and water consumption are not the same: withdrawal refers to water taken from a source, while consumption refers to the portion not returned to that source.

How serious is the environmental cost?

A 2024 report by Lawrence Berkeley National Laboratory for the US Department of Energy estimated that data centres in the United States directly consumed about 66 billion litres of water in 2023.

The International Energy Agency estimated global data centre electricity consumption at around 415 terawatt-hours in 2024, equivalent to about 1.5% of worldwide electricity use.

Their environmental footprint extends beyond direct water use. Electricity generation also consumes water and produces emissions, while constructing facilities and manufacturing equipment require additional resources.

The overall impact varies considerably depending on location, the source of electricity and the cooling technology used.

Why not use river water or seawater?

River water can be used in cooling systems, but developers must account for seasonal availability, water quality and the potential impact of warmer discharge on aquatic life. Treated wastewater can reduce reliance on freshwater if it meets the technical requirements of the cooling system.

Seawater is another option for facilities in coastal areas. Google's data centre in Hamina, Finland, uses seawater from the Gulf of Finland for cooling.

However, saltwater corrosion, infrastructure costs and the ecological effects of discharging warmer water make this option unsuitable for every location.

Air-based and closed-loop cooling systems can also reduce water consumption, although they come with their own costs and energy-efficiency trade-offs.

Why allow data centres if other infrastructure also harms the environment?

Power stations, factories, roads, ports and housing developments all consume resources and can damage ecosystems. Societies permit such infrastructure because it provides electricity, transport, jobs, goods and services.

Data centres also support essential services, including banking, communications, public administration and scientific research.

The question, therefore, is not simply whether data centres should be allowed, but whether their benefits justify their environmental costs and whether those costs can be reduced.

Data centres should not receive automatic exemptions from environmental safeguards. If a project threatens household access to scarce water, it may require stricter conditions or a different location.

What should Bangladesh do?

If Bangladesh wants to attract more data centre investment, it should assess water availability and electricity capacity before approving projects, rather than after facilities begin operating.

Environmental assessments should examine local water stress, competing household and industrial demands, energy sources and potential effects on rivers and ecosystems.

Developers should disclose their projected water withdrawals and consumption, identify proposed water sources and explain their cooling choices. Where feasible, they should use treated wastewater or water-efficient cooling systems instead of relying on drinking-water supplies.

Seawater-based cooling could be considered for suitable coastal locations, but only after evaluating infrastructure costs and potential impacts on marine ecosystems.

Project approvals should also include regular monitoring, enforceable water-use limits where necessary and contingency plans for droughts. Above all, access to safe water for households must remain a priority.

Batam's experience does not prove that data centres caused its water crisis. It does, however, highlight the risks of allowing investment to expand amid water shortages and uncertainty over resource use.

For Bangladesh, the lesson is clear: environmental limits and safeguards must be established before investment arrives, rather than waiting for residents to protest after their taps run dry.