US Cities Eye AI Data Center Limits as Study Flags Water Risks

In brief

• Cities in Texas, North Carolina, Kentucky, and New Jersey have pursued bans or moratoriums on data centers.
• Power plants serving data centers in seven states withdraw about 3.4 trillion gallons of freshwater annually.
• At least 75 proposed projects worth about $130 billion faced local opposition in early 2026.

Cities across the U.S. are restricting AI data center development as communities raise concerns about water supplies, electricity costs, and land use.

Austin, Texas, became the latest city to act Thursday, when its City Council voted unanimously to begin drafting rules that could restrict or exclude new data centers.

The vote followed a Ceres study examining water withdrawn by power plants serving data centers in Virginia, Texas, California, Illinois, Georgia, Ohio, and Arizona. The seven states host about half of the nation’s data centers.

Those plants withdraw about 3.4 trillion gallons of freshwater annually, equal to 10.4 million acre-feet. That exceeds California’s average annual urban water demand of 8 million acre-feet and is about 12 times the combined annual water use of Los Angeles, Phoenix, and Washington, D.C., according to the study.

“Overall, we saw that 66% of the power plants that use water in those states were exposed to medium to high water stress,” Kristen James, senior program director for water at Ceres, said in a statement.