The data centers are coming: A practical guide for water and wastewater utilities

Data center locations are typically selected based on their access to cheap, reliable electricity; states that offer aggressive tax incentives; and regions with a low risk of natural disasters, ensuring the near-constant uptime required by the modern digital world. What’s not always considered, but should be, is the availability of a long-lasting, ample water supply. This has put water utilities at risk.

Data centers put a significant burden on local water utilities due to the immense cooling requirements of high-density server racks. These centers can consume between one and five million gallons of water per day—usage comparable to that of a small city. In more drought-prone regions, if reuse water (treated wastewater) isn’t available, data centers’ high consumption has sparked tension as tech companies compete with residential and agricultural sectors for dwindling water resources, forcing utilities to reconsider how they prioritize industrial water allocations.

The impact extends to wastewater infrastructure as well, primarily due to the quality of wastewater these centers can generate. When this concentrated effluent is discharged into municipal sewers, it can corrode pipes and interfere with the biological processes used at treatment plants. Though utilities will seek "water-neutral" strategies when they can, such as using reclaimed water for coolant, data centers put water and wastewater utilities in a precarious position.  

As the essential guardians of public health and environmental safety, they provide the critical infrastructure needed for any community to function and thrive. What they don’t do is possess the regulatory authority to determine the timing or location of land development—a power traditionally held by local planning commissions and zoning boards. Nevertheless, our water and wastewater utilities have a "duty to serve." Their role is to support a community's development decisions by determining and quantifying the cost of the upgrades and capital investments required for any new development, including data centers. The utility does this to ensure that new projects are integrated into the existing grid without compromising the safety or service quality of the current customer base.  

Nevertheless, data centers scare customers. As much as they love using the quick and convenient technology that data centers enable, many customers take a “not in my backyard” (NIMBY) stance when it comes to data centers, with the water utility as a target of their ire. This tension often arises because of a structural gap: the utility is tasked with the technical "how," but the local government controls the "why," "if," and "where." When these two entities aren't in lockstep, the utility is left to defend a project it didn't approve. We’ve divided this article into two parts to deal with both the utility aspect and the local government aspect. The local government piece will be published in March of 2026. First, let’s explore the utility’s best actions.  

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Strategic steps to take

A utility in this very scenario recently asked Raftelis for help, and this is the guidance we provided.

1. Make sure everyone understands your role in the community
   Water utilities are neutral in any community’s growth decisions, but many customers don’t know that. So a utility’s primary strategy should be to decouple itself from its governing body’s development approval process. The message that goes with that is the utility’s function is dictated by law; it does not choose which businesses operate, it only ensures that water (or wastewater) service is provided fairly, legally, and environmentally soundly when needed.
2. Own the narrative with full transparency
   Customers and environmental groups will be very concerned about what volume of water the data center will need and how that will impact the utility’s ability to serve them well into the future. Since this particular issue can cause some customers to react emotionally, it’s important that the utility express empathy first before diving into facts. Acknowledge their fear, sit with them in it, then share what actions you are taking. To every extent possible, share all the data and information you have on how much water will be needed, by when, how you’ll secure it, and, importantly, who will pay for it. Many utilities operate on a “growth pays for growth" policy, which helps alleviate customer concerns about rate hikes to cover the data center water costs. Remember that planning for the future and ensuring a resilient supply is what you have always done, so pull out the receipts to prove it.
3. Correct all mis- and disinformation
   You don’t have to react to every negative comment about you or the issue on social media, but you should correct any misstatements, whether innocent or intentional. It’s best to correct misstatements in the same place they appear – so an Op-Ed or Letter to the Editor should receive a response in the same paper, the same way. A comment on Facebook should be answered on Facebook. Then use your website as the home base for all the facts. Share your role, your actions, and your data there – and incite people to read from your site with social media posts that lead them there. One of the more vulnerable topics for rumors to swirl around is the funding of new data center water. Make it clear from the start which entity will pay for what. Usually, the developer pays to extend infrastructure to the new development, so make that known. Then, map out the finance plan for your future, resilient water supply, if known.
4. Obtain alignment with community partners
   Identify all key community partners impacted by the data center, such as elected boards, jurisdictional staff, planning commission members, activists, the data center company, and others, to seek alignment and agreement on the facts. Identify specific and discrete roles for each organization to verify who will speak to which topic or aspect of the decision. Share your key messages and materials and ask for their help in managing and shaping the public discourse.
5. Reach out to the opposition
   Ask for a meeting with opposition leaders to give them a chance to be heard by your leadership directly. Use this opportunity to find alignment on values and build from there. Correct any misinformation and commit to maintaining open and transparent lines of communication.
6. Invite the public to engage in your decisions
   As a public agency, your success increases when your customers are informed and understand the “why” and the “how” behind each decision you make. Engaging them in your decision-making process helps assure this happens and fortifies the relationship you have with them by demonstrating your respect for their input and your commitment to addressing their concerns. Your customers will appreciate the opportunity to be heard and to see their comments or ideas reflected in final decisions, even if the decisions don’t go their way.

The water utility is, of course, not alone in this issue. Its success is highly influenced by the communications approach of its local government. Next month, we will delve into the local government role when data centers come to town, with advice on how they can assure more positive outcomes for their water utilities and themselves. Stay tuned!