Data centers aren't causing this.

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Let Data Centers Have Their Water

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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The data centers that our world increasingly runs on need water to stay cool. How much? "A midsize 15-megawatt center uses between 80 million and 130 million gallons of water a year for cooling, according to industry estimates," Drew Fitzgerald reported in the Wall Street Journal on June 24. Water-starved California has about 800 of these places. Multiply 800 times 130 million, and you get 104 billion gallons a year.

That sounds like a lot of water! But pay close attention to the unit of measurement. As Alexis Madrigal wrote in The Atlantic last year:

An unofficial rule of California water politics holds that if you want to make an amount of water sound large, use gallons. If you'd like to make it sound small, set your units to acre-feet or even million acre-feet.

Let's make it sound small. A midsize 15-megawatt data center uses between 245 and 400 acre-feet of water a year for cooling. The statewide estimate of 104 billion gallons a year converts to 319,000 acre-feet. This could also -- awkwardly but not incorrectly -- be expressed as 0.3 million acre-feet a year. Which is nothing, right?

Well, not nothing. Overall agricultural, industrial, commercial and residential water use in California totals 40 million to 45 million acre-feet of water a year; data centers use about 0.8 percent of that. For a category of water use that barely existed two decades ago, that's significant.

It's a lot more significant, for example, than the 2,164 acre-feet of California water that Nestle puts into bottles every year -- a source of controversy in recent months. It's vastly more than the 214 acre-feet of water used last in year in California in another controversial endeavor, fracking for oil and gas.

On the other hand, it's nowhere near the more than 10 million acre-feet used each year in the state to grow stuff for cattle and other livestock to eat, the 3 million to 4 million acre-feet a year of water needed to keep California's almond trees producing, or the 3 million acre-feet of water that goes to outdoor residential uses (lawns, pools, etc.). It's at least in the same ballpark as the 800,000 acre-feet used for large-scale landscaping, such as watering golf courses and parks.

Californians and consumers of California products have been learning a lot this drought year about how much water it takes to grow, produce, cool or keep alive various things. These revelations are usually expressed in gallons and geared toward eliciting a reaction of, "Wow, that's a lot of water!" This is in many ways a useful reaction -- raising awareness of how much fresh-water use modern life requires has to be good, right? But there are important questions that should be asked after that initial shock. I've come up with four.

1. Is that really a lot of water? The Wall Street Journal article on data centers includes a graphic that shows some other things that use 100 million to 130 million gallons of water a year: a hospital, two golf courses, a 100-acre almond orchard. Interesting, but not all that informative. Venture capitalist Marc Andreessen, in a Twitter reaction to the Journal article, found another comparison -- newsprint production nationwide uses up about as much water as California's data centers do. His point was that as information delivered via those data centers drives people away from newspapers, we might be getting some offsetting water savings. But there don't appear to be any newsprint mills in California, so this is irrelevant to the state's water picture.

What seems most important in the context of California's drought is whether a particular water use actually amounts to a significant drain on the state's resources. Data-center water use appears to be big enough to pay attention to, if perhaps not obsess over. Frackers' water consumption seems like it isn't even worth talking about. Nestle's bottling operations have no noticeable statewide impact, although they may be a big drain on local water systems. Swimming pools, while they seem emblematic of water profligacy, are actually not huge water users. And agriculture, of course, is by far the biggest water user of all.

2. Is it used to produce something of economic value? I think residential outdoor water use fails this test much of the time. Yes, lush lawns are aesthetically pleasing (and are certainly better for property values than dead brown ones), but less-thirsty landscaping can be, too. And while it should be up to homeowners to decide what pleases them most, it should also be up to them to pay through the nose for much-higher-than-average water use. A state appeals court ruling in April made it harder for California water providers to charge tiered rates; let's hope they can find a way around that and force those Rancho Santa Fe water wasters (among others) to shape up. Bottled water seems pointless in a country with mostly safe municipal water, but people do pay for it so the convenience must have some value. Many California farmers argue that water flows reserved for keeping fish alive are an economic waste (in part because they haven't been successful in keeping the fish alive), but that's a complex issue best saved for another day.

As for data centers, Peter Gleick of the Pacific Institute estimated that in 2001 the high-tech sector in California produced $950,000 of gross state product for every acre-foot of water used. I'm not sure data centers per se would score that high (they're not exactly big employers), but the tech industry as a whole is hugely important to the state, and dramatically more productive per acre-foot of water used than agriculture (which generated $893 per acre-foot in 2001, according to Gleick, with crops such as rice and alfalfa much lower).

3. Could you do it with less water? This has been a big question for operators of data centers. James Hamilton, who oversees the design of Amazon Web Services' data centers, has called their water consumption "super embarrassing," and efforts have been underway for several years to cut back or use recycled water. (In general, treated wastewater is the single biggest potential new water supply on the horizon for California -- about 670,000 acre-feet were reused in 2010, and there's potential for another 1.2 million to 1.8 million acre-feet per year.) As mentioned, residential landscaping is something that, with different plant choices, could use a lot less water.

Agriculture is a complicated case -- you simply can't grow crops without lots and lots of water, and while some crops need less water than others, trying to nudge farmers toward conservation by raising the price of water can have unexpected consequences. Almond orchards are big water users on a per-acre basis, but California farmers have been planting more and more of them as water has become less plentiful (a million acres total in 2014, up from 640,000 a decade ago) because they also bring in more dollars per acre than other crops.

4. Could you do it somewhere else? For data centers, the answer is, "Yes, but." There has already been a shift toward locating them where the weather is cooler and the water and electricity cheaper, but there are limits to how far they can be removed from the users of the cloud services they host. As long as California is the headquarters of the tech industry, it will probably still need lots of data centers. With bottled water, it's also nice to be close to customers, but I wonder if Nestle will eventually decide it's better to get its water elsewhere.

Agriculture is the really big question. Its occasional water-supply problems aside, California is a spectacular place to grow lots and lots of crops. It's got a gigantic, flat, fertile, sun-baked valley at its center, plus coastal valleys with mild climates that are perfect for berries and lots of other fruits and vegetables, desert valleys near the Mexican border where you can grow summer crops in the winter, and hillsides all over the state where you can grow some of the world's great wine grapes. Still, there are those who argue that maybe other, wetter parts of the country -- the Southeast in particular -- should take over some of California's crop production. They may have a point.

Put all that together, and California's data centers seem like a pretty reasonable use of water. Not that they shouldn't use less -- and I haven't even gotten into their electricity consumption. But in a state that needs to reduce its water use, there are far juicier targets.

  1. I haven't found a statewide estimate, but extrapolating from this Pacific Institute guesstimate of water losses by evaporation from Los Angeles area pools (2,000 acre-feet a year), it seems like it couldn't be greater than the low tens of thousands of acre-feet statewide.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor on this story:
Paula Dwyer at pdwyer11@bloomberg.net