Sydney: Australia’s technology sector is expanding at a rapid pace, with billions pouring into the construction of data centres across New South Wales, particularly in the greater Sydney region. Global giants such as Microsoft, Amazon, and AirTrunk are leading this expansion, with ten large-scale projects already approved, carrying a combined investment of nearly A$6.6 billion. While these developments are touted as crucial for the digital economy, a pressing concern is emerging: the lack of clarity over how these facilities will manage their immense water requirements.
At the heart of the issue lies the planning framework itself. State laws require developers to demonstrate how they will “minimise consumption of water,” yet these approvals often lack measurable or enforceable targets. Fewer than half of the approved data centres provide any quantified projections on water savings through alternatives such as rainwater harvesting or recycled water. This ambiguity has sparked growing unease among environmental groups, water authorities, and local councils.
The projected water consumption of the newly approved facilities stands at around 9.6 gigalitres annually roughly 2% of Sydney’s maximum water supply. While this figure may appear manageable now, the trajectory is concerning. By 2035, data centre demand could rise to as much as 135 gigalitres per year, equivalent to nearly a quarter of Sydney’s water reserves. These projections assume reductions in usage, but the absence of firm commitments leaves doubts about whether such savings will ever be realised.
Sydney’s water system is already under strain. The city depends heavily on a single dam and a desalination plant, resources that become stretched during droughts and extreme heatwaves. The drought of 2019, coupled with bushfires, forced the government to impose restrictions on household water use, including bans on garden watering and car washing. Critics argue that in future crises, residents and farmers may be forced to tighten their belts while large-scale facilities continue to draw significant volumes of potable water.
Local councils have voiced frustration, warning that state-level approvals are sidelining community concerns. Some municipalities are now pushing for greater authority to regulate or even halt new projects unless developers provide concrete water management strategies. They argue that without enforceable standards, Sydney risks locking itself into infrastructure that undermines the city’s long-term water security.
The industry response has been mixed. Amazon has stated that its cooling systems rely on air circulation for about 95% of the year, limiting water use, while Microsoft and Amazon have made modest commitments to reduce potable water reliance by 12% and 15% respectively at certain sites. AirTrunk, however, has proposed only minimal reductions, estimating rainwater harvesting could lower potable use by a mere 0.4% at one of its major sites. Such pledges, while notable, fall far short of the scale of the challenge.
The broader implications are significant. As Australia positions itself as a regional hub for cloud services and data storage, it must reconcile this economic opportunity with environmental realities. Climate change is already intensifying the risk of droughts, making water one of the country’s most contested resources. Policymakers now face the challenge of tightening regulations to demand measurable targets, transparency in reporting, and greater reliance on non-potable alternatives.
Without decisive action, Sydney could soon find itself in the uncomfortable position of balancing its digital ambitions against the basic needs of its citizens. The data centre boom may symbolise technological progress, but unless water management is brought into sharper focus, it could also represent a costly gamble with Australia’s most vital natural resource.