Hidden Environmental Cost of Powering Growing Digital and AI-World
Despite significant water stress in several states, large data centre projects continue to be announced, drawing attention to the water footprint of expanding digital and AI infrastructure in India
A large hyperscale data centre can draw close to two million litres of water a day for cooling, with roughly 80% of that water lost permanently to evaporation rather than being recycled
States such as Andhra Pradesh and Telangana account for a large share of newly announced data centre capacity, including projects sited in cities already facing groundwater and drinking-water stress
An indirect water footprint also arises from the electricity used to power data centres, since thermal power generation itself requires large volumes of water for turbine cooling
India's built data centre capacity is projected to nearly triple between 2025 and 2030, intensifying this combined direct-and-indirect water demand
Central Ground Water Authority (CGWA) and Groundwater Extraction Regulation
The Central Ground Water Authority was constituted in January 1997 under Section 3 of the Environment (Protection) Act, 1986 to regulate and control groundwater development and management across India, distinct from the Central Ground Water Board (CGWB), which focuses on resource assessment and scientific study.
Key Details
- Projects extracting groundwater above prescribed thresholds — 100 cubic metres/day in over-exploited, critical, and semi-critical assessment units, and higher thresholds (500-2,000 cubic metres/day) in safe alluvial/non-alluvial areas — must undergo mandatory impact assessment and obtain a No Objection Certificate from CGWA
- CGWA's regulatory framework was designed primarily around industrial and infrastructure water use generally, and does not yet contain data-centre-specific extraction or cooling-technology mandates
- Some states classify data centres as "essential services," which affects how they are prioritised relative to residential drinking-water supply during periods of scarcity
- Groundwater is a common-pool resource; over-extraction beyond replenishment rates lowers the water table, a concern flagged in IT/data-centre hub districts
The absence of a data-centre-specific groundwater regulatory framework at the national level is central to the "hidden cost" argument — large facilities can be approved and expanded even in areas classified critical or over-exploited under CGWA's own assessment categories, unless states impose additional local restrictions.
National Water Policy, 2012 — Water Allocation Priorities
The National Water Policy, 2012 is a non-binding framework document that lays out principles for equitable and sustainable water use across India, recommending drinking water as the highest-priority use, followed by irrigation, hydropower, ecology, agro-industries, and non-agricultural industries, with water treated as an economic good to encourage conservation.
Key Details
- NWP 2012 replaced the NWP 2002 (itself a revision of the original NWP 1987) and is advisory since water is primarily a State subject (Entry 17, State List) with some related Union and Concurrent List entries for inter-state rivers
- A committee headed by Mihir Shah was constituted to draft a revised National Water Policy addressing climate change and contemporary water stress; its report was submitted in 2021, though a fresh national policy has not yet been formally adopted
- The Policy's prioritisation framework is advisory rather than binding on States or on sector-specific industrial allocation decisions
- India's projected water demand is expected to be roughly twice the available supply by 2030, according to NITI Aayog assessments, a scenario the policy framework was meant to help pre-empt
Data centres being classified as "essential services" by some States runs against the NWP's stated priority ordering (drinking water first), illustrating the gap between an advisory national framework and binding state-level industrial policy decisions.
India's Water-Stress Status and the Composite Water Management Index
India's average per-capita water availability is around 1,341 cubic metres annually (as of 2025 estimates), below the international "water stressed" threshold of 1,700 cubic metres per capita, placing India firmly in the water-stressed category globally.
Key Details
- NITI Aayog's Composite Water Management Index (CWMI) tracks state-level performance on groundwater, surface water, irrigation efficiency, and policy implementation, and has flagged that roughly 600 million Indians face high-to-extreme water stress
- Per-capita availability is projected to decline further, from about 1,341 cubic metres (2025) toward roughly 1,140 cubic metres by 2050, moving India closer to the "water scarce" threshold of 1,000 cubic metres per capita
- Falling per-capita availability results from both population growth and a roughly fixed total renewable water resource base
- Energy-intensive digital infrastructure adds a new demand vector to this already-constrained baseline, distinct from traditional agricultural and municipal demand
New data centre capacity is being sited in a country already below the international water-stress threshold, which is why environmental commentary treats the sector's water footprint as an emerging, largely unaddressed policy gap rather than a marginal issue.
- A 100 MW hyperscale data centre using evaporative cooling can consume approximately 800,000 to 2 million litres of water daily
- Roughly 80% of water used in evaporative cooling is lost to the atmosphere rather than recycled
- India's data centre capacity is projected to grow from about 1.6 GW (2025) to about 5 GW (2030), a compound annual growth rate of roughly 26%
- India's per-capita water availability: about 1,341 cubic metres (2025), below the international water-stress threshold of 1,700 cubic metres
- CGWA groundwater extraction thresholds requiring mandatory clearance: 100 cubic metres/day in critical/over-exploited/semi-critical areas
- CGWA was constituted in January 1997 under Section 3 of the Environment (Protection) Act, 1986