Artificial Intelligence Expansion Strains US Water Supply, Warns JPMorgan

A recent report by JPMorgan Chase and consultancy ERM highlights the growing pressure on the US water supply due to the rapid advancement of artificial intelligence (AI). The report emphasizes the urgent need for improved water management practices to ensure future water availability.

AI's Impact on Water Supply

The report, released on October 28, points out that the rise in AI technologies, such as data centers and semiconductor manufacturing, is leading to an increasing imbalance between water supply and demand. It warns that neglecting the water needs of AI and other industries could have severe implications. The report states, "There is an urgent and growing need to build resilience into our collective water management practices if we are to have reliable water for use in the future." It further mentions that the increasing instability of water resources is "pushing us closer to disrupted ecosystem services, threatened biodiversity, and impacted human livelihoods."

Increasing Water Demand

The primary factors contributing to the rising water demand in the US are the growing population and the migration of people to warmer, sunnier regions already grappling with water supply issues. However, the reshoring of manufacturing and the rise of AI-based data centers are further straining water resources. Data centers, in particular, consume significant amounts of water, often sourced from drinking water supplies, to cool servers that generate substantial heat. A mid-sized data center can use about 300,000 gallons per day, while larger facilities can consume up to 1 million to 5 million gallons daily. This consumption is comparable to the water needs of a town of 10,000 to 50,000 people. The report reveals that in 2023, US data centers consumed over 75 billion gallons of water. Approximately 20% of this water was drawn from stressed watersheds, posing risks to the technology industry as well as the surrounding communities and environment.

AI's Broader Impact on Water

The report also warns that AI's impact on the water sector extends beyond the cooling technologies used in data centers. Semiconductor chips, which are essential for data center operations, require vast amounts of water for manufacturing and produce toxic wastewater, presenting further water management challenges. The report states, "As semiconductors are the foundation of the AI supply chain, the future water management of their operations will be critical for the water sector." The pressure from AI-driven demand is part of a broader set of water-related risks, including the potential for business assets to become unusable or unprofitable due to insufficient supply or stricter regulations, such as wastewater discharge requirements.

Call for Increased Investment

JPMorgan and ERM's report advocates for increased investment in water infrastructure, which currently faces an annual funding gap of $91 billion. It suggests that innovative technologies, like waterless cooling systems for data centers and advanced wastewater recycling solutions for semiconductor manufacturing, could play a crucial role in addressing water scarcity and stress.

Bottom Line

The expansion of AI technologies is undoubtedly contributing to a myriad of advancements and conveniences. However, it's also clear that this progress comes with significant environmental implications, particularly concerning water resources. As the demand for water continues to rise, the need for sustainable water management practices becomes increasingly urgent. What are your thoughts on this issue? Do you think enough is being done to address the water demands of AI and other industries? Share this article with your friends and join the conversation. Don't forget to sign up for the Daily Briefing, available every day at 6pm.