Business EconomyPosted at: Sep 8 2025 1:25PM


AI data centres will drive massive annual water consumption by 2028: Morgan Stanley Report

New Delhi, Sep 8 (UNI) The Artificial Intelligence (AI) boom could soon put heavy pressure on global water resources, with data centres projected to increase their water consumption eleven times by 2028, according to a report by Morgan Stanley.
The report said, “AI data centres will drive annual water consumption for cooling and electricity generation to approximately 1,608 billion litres by 2028 (our base case)- an 11 times increase from 2024 estimates.”
An 'AI data centre' is a specialised and highly advanced facility designed to meet the demanding requirements of artificial intelligence (AI) and machine learning (ML) workloads.
It consumes a massive amount of water primarily for cooling, as the servers and routers inside these facilities generate enormous heat, and to prevent overheating, companies rely on cooling systems.
Morgan Stanley noted that its analysis covered three categories of water use:- direct consumption at data centres, indirect water usage tied to electricity generation, and upstream demand from semiconductor fabrication.
The report also noted that AI’s water use could vary between 637 billion litres and 1,485 billion litres annually by 2028, depending on regional energy mixes, cooling technologies, and efficiency improvements.”
The report also flagged growing concerns about the location of new data centres. More than half of the world’s largest hubs are concentrated in regions facing medium-to-high water stress, raising risks of shortages and local environmental strain.
“More than half of the world’s top data centre hubs are in areas already facing medium basin physical risk (medium level vulnerability) to threats from drought, flooding, and declining water levels,” the report said.
Morgan Stanley is a US-based multinational investment bank and financial services company that provides investment banking, securities, wealth management, and investment management services to corporations, governments, institutions, and individuals worldwide.
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