Texas Water Strain Raises Questions for Data Center Boom

A deepening water crisis in Corpus Christi, Texas, is raising questions about how to sustain growth in water-stressed regions as new, resource-intensive industries—including data centers—expand.

Projections from city officials show Corpus Christi is approaching triggering emergency water measures, with supply projected to fall short of demand within 180 days by May.

City officials and researchers say the shortfall isn’t tied to data center development, but to prolonged drought and years of limited water use.

Still, the crunch comes as Texas leaders push to attract more development, including artificial intelligence data centers. Industry projections show Texas could overtake Virginia as the world’s largest data center market by 2030, adding a new layer of demand in regions already facing resource constraints.

“It’s drought and delayed planning for additional water supplies,” said Margaret Cook, vice president of water and community resilience at the Houston Advanced Research Center. “I think this is a test case.”

Industrial Demand

Industrial users account for a significant share of water demand in Corpus Christi and generate substantial revenue for the system through water rates that fund infrastructure and operations. The city is also required to serve customers within its designated service area under state law, limiting its ability to turn away new development.

Industrial users account for roughly 60% of demand, while population growth is also adding pressure, said Nicholas Winkelmann, chief operating officer of Corpus Christi Water. He said the city is working to expand supply, with nearly $1 billion in projects underway, including desalination, groundwater development, and water reuse, to reduce reliance on drought-prone surface water.

But the strain is shaping how other Texas cities approach large-scale projects. College Station leaders rejected a land sale to a data center developer in September after residents raised concerns about water and electricity use.

Mayor John Nichols said in an interview the debate reflects a broader question cities are facing as they weigh new development.

“The resources, not just in College Station, but across the region, that this data center would draw—we don’t like that,” Nichols said, adding that local officials have to balance the economic upside of major projects with whether the infrastructure is in place to support them.

Robert Mace, executive director of the Meadows Center for Water and the Environment, said those gaps often don’t become clear until conditions tighten.

“If there’s one lesson, it’s that communities should consider planning for droughts worse than the drought of record,” he said, referring to the most severe dry period historically used to size water systems.

Even in places not facing shortages, water planning in Texas is built around those worst-case scenarios, which can shape how cities evaluate new demand.

Yi Ding, an assistant professor at Purdue University who studies infrastructure systems, said that pressure is likely to grow as new industries expand into regions already facing resource limits.

Planning Gaps

Corpus Christi has long relied on surface water—supplies drawn from rivers and reservoirs—which works in wetter years but becomes a vulnerability during prolonged drought. The city expanded its supply decades ago, but options such as reuse, groundwater, and desalination haven’t been pursued significantly for backup supplies until recently.

“It’s unusual—I can’t think of another system in the state with a backup supply,” Mace said. “Developing it is expensive.”

Cook added that cities chasing growth can underestimate long-term water risks, particularly when demand projections fail to capture how quickly new industries can scale.

The issue is becoming more pronounced as data center development accelerates. Large facilities can use millions of gallons of water a day, particularly for cooling. Mace said they represent another major demand source competing for limited supplies.

Although more water-efficient technologies exist that could reduce that impact, Cook said the largest facilities in Texas have been slower to adopt them.

Ding said policymakers should pay attention to how facilities are designed, noting that water use can vary significantly depending on cooling systems and site-specific factors.

Growth vs. Supply

The broader question for Texas is whether water planning can keep pace with the state’s economic ambitions. Because water projects can take years to come online, decisions made now will shape supply constraints for years to come.

“Water infrastructure often trails development,” Mace said, adding that shortfalls only become clear under stress as cities scramble to secure new supplies.

The risk also comes down to how projects are approved. When cities underestimate long-term demand or cut costs to attract development, those decisions can shift the burden onto residents.

Researchers also say current planning models don’t fully capture future demand tied to data centers, in part because Texas updates its plans every five years and the latest, released in 2022, predates the current boom.

“How do you plan for something you didn’t even know existed when you were planning?” Mace said. “And how do you project a super dynamic private industry, like data centers?”

State leaders have begun to acknowledge those pressures.

“Meeting the water and energy needs of Texans remains the Governor’s top priority,” Andrew Mahaleris, a spokesperson for Gov. Greg Abbott, said in a statement, adding that large facilities are expected to bring their own water and disconnect if supplies are strained.

Abbott has also backed a $20 billion investment to expand water supplies and repair aging infrastructure. A law signed last year (S.B. 6) requires large data centers to register with the Electric Reliability Council of Texas and the Public Utility Commission, provide backup generation, and help fund grid upgrades to ensure residential customers aren’t subsidizing those costs.

Texas Lt. Gov. Dan Patrick directed state senators to study data centers, ordering committees to examine water and electricity demands and weigh economic benefits against impacts on landowners and infrastructure.

Cook said policymakers have tools to better align growth with water availability, including requiring more efficient technologies and ensuring new users help fund the infrastructure needed to support them.

“They should be using the technology that saves the most water,” she said.