By The Katy News
Texas is rapidly becoming one of the nation’s largest centers for artificial intelligence, cloud computing and data-center development. Billions of dollars in investment could bring construction, technology jobs and new tax revenue to communities across the state.
But behind the servers, artificial intelligence systems and massive computing campuses is a resource that receives far less attention than electricity: water.
Data centers generate enormous amounts of heat. Depending on how a facility is designed, significant quantities of water may be needed to keep thousands of servers and processors cool.
For communities such as Katy, Fulshear, Richmond and other rapidly growing areas of Fort Bend, Harris and Waller counties, the question is becoming increasingly important: Could Texas’ data-center boom eventually compete with residents and businesses for water?
Research from the Texas Water Development Board and Texas universities indicates that the answer is complicated—but the issue is significant enough that state officials are now paying close attention.
How Much Water Can a Data Center Use?
There is no single number that describes how much water a data center uses. The amount can vary dramatically depending on the size of the facility, its computing equipment, local climate and, most importantly, its cooling technology.
Texas A&M AgriLife Extension researchers provide a useful example: a data center using 1 million gallons of water per day would consume more than 1,100 acre-feet of water annually, and a hyperscale data-center campus could require several times that amount.
Research from the University of Texas at Austin shows just how wide the range can be.
Different cooling technologies can range from essentially no direct evaporative water consumption for some dry-cooling systems to substantially higher consumption for cooling towers. UT researchers found that indirect evaporative cooling using cooling towers can have a Water Usage Effectiveness range of approximately 0.46 to 0.66 gallons per kilowatt-hour, while dry cooling can approach zero direct water consumption.
There is another part of the equation that residents may never see.
Data centers consume enormous quantities of electricity. Producing that electricity at natural-gas, coal and nuclear power plants can itself require water. UT researchers therefore distinguish between direct water use, such as cooling water at the data center, and indirect water use associated with generating the electricity used by the facility.
For mid-sized and large data centers, UT researchers estimated that water consumption associated with electricity generation alone could range from roughly 12 million to 660 million gallons annually, depending on the size of the data center and source of its electricity.
That means a data center advertised as having relatively low on-site water consumption could still have a larger overall water footprint when electricity production is considered.
Texas Data Centers Could Eventually Use Hundreds of Billions of Gallons
The statewide numbers are potentially much larger.
A University of Texas at Austin analysis estimated approximately 33 billion gallons of combined direct and indirect water use by Texas data centers in 2025, equivalent to roughly 0.6% of projected statewide water demand.
Under the researchers’ modeled scenarios, average total water use could increase to approximately 225 billion gallons annually by 2030 and 348 billion gallons by 2040. The researchers emphasize that these are scenario-based estimates rather than guarantees; actual consumption will depend heavily on how many proposed data centers are actually constructed, cooling technology, operating efficiency and the type of electricity generation supplying them.
The University of Texas summarized the potential long-term range another way: data centers could account for approximately 3% to 9% of Texas water use by 2040, compared with less than 1% currently.
That upper-end estimate would make data centers a significant new component of Texas’ water demand.
Where Are Texas Data Centers Going?
Data centers are not confined to one part of Texas.
According to the University of Texas at Austin’s Bureau of Economic Geology, the state’s major data-center hubs currently include Dallas, Houston, Austin and San Antonio, while large new campuses are being planned elsewhere in Texas.
North Texas continues to see major development. Researchers at the University of Texas at Arlington report that several large-scale facilities are being developed across North Texas.
West Texas is also emerging as a major market. University and state-supported workforce programs in Abilene are already preparing workers specifically for the rapidly growing data-center industry.
The Texas Panhandle is another major growth area. The Texas A&M Real Estate Research Center reported in January that several new data centers are driving construction activity there, including massive projects near Amarillo and Claude in Armstrong County.
Central Texas has experienced significant growth as well. Texas A&M’s Real Estate Research Center reported that data-center construction around Austin and San Antonio increased fourfold between 2023 and 2024, reaching approximately 463.5 megawatts of potential demand under development.
Overall, Texas A&M researchers reported earlier this year that Texas had approximately 405 data centers, with another 442 under construction or planned at that time. Not every proposed project will ultimately be completed, but the figures demonstrate the scale of interest in Texas.
Electricity May Be Just as Important as Water
Water is only half of the infrastructure question.
ERCOT reported that Texas is experiencing an unprecedented surge of proposed large electrical loads, particularly from data centers.
In an April 2026 presentation, ERCOT said it was tracking approximately 410 gigawatts of large loads seeking interconnection, with approximately 87% associated with data centers. ERCOT has cautioned that interconnection requests should not be interpreted as a prediction that every project will actually be built.
The numbers nevertheless demonstrate why state officials are concerned about how quickly these projects could affect Texas infrastructure.
The Advantages of Data Centers
There are legitimate economic arguments in favor of data-center development.
The University of Texas Bureau of Economic Geology reports that the industry creates direct employment in fields including information technology, engineering, cybersecurity and facility management while also supporting construction, maintenance, utilities, real estate and other businesses. UT researchers estimated that the Texas data-center industry supported 47,604 jobs and approximately $1.9 billion in wages during the third quarter of 2024.
Large facilities can also represent enormous capital investments.
Texas’ tax laws illustrate their potential scale. To qualify for certain state data-center tax exemptions, a traditional qualifying data center generally must commit to at least $200 million in capital investment and 20 qualifying jobs, while qualifying large data-center projects must commit to at least $500 million and 40 qualifying jobs.
Data centers also provide the infrastructure supporting services Texans increasingly depend upon, including cloud computing, artificial intelligence, online banking, communications, health-care technology and business information systems.
The Potential Disadvantages
The benefits come with significant infrastructure questions.
Among them are:
Water demand. Facilities using evaporative cooling can consume substantial amounts of water, particularly during hot Texas summers.
Electricity demand. Large AI data centers can require hundreds of megawatts or even gigawatts of power.
Infrastructure requirements. New transmission lines, substations, water pipelines, roads and other infrastructure may be necessary.
Competition for resources. In areas dependent on stressed groundwater or limited municipal supplies, additional industrial demand could compete with agriculture, businesses and residential growth.
Limited permanent employment compared with investment. Data centers can generate substantial construction activity and capital investment, but the number of permanent employees may be relatively modest compared with the physical size and value of a project.
Texas A&M AgriLife researchers have specifically warned rural communities that data centers can compete with farmers and communities for land, water and energy, particularly where groundwater supplies are already stressed.
Is Texas Already Facing a Water Shortage?
It is important to distinguish between Texas having a statewide water crisis today and Texas facing projected shortages during drought conditions.
Texas is not simply “running out of water” everywhere at the same time.
However, the Texas Water Development Board’s planning process identifies areas where existing supplies may not meet projected demand under drought-of-record conditions. The state’s newly adopted 2027 State Water Plan contains thousands of recommended water-management strategies and projects intended to ensure communities have reliable future supplies.
Texas therefore has a long-term water-supply challenge even without data centers.
Population growth, drought, agriculture, industry and municipal development are already increasing pressure on supplies. Adding a rapidly expanding, potentially water-intensive industry makes accurate planning increasingly important.
That is one reason the Texas Water Development Board has changed how it tracks the industry.
TWDB says data-center water use is now being separately tracked through the state’s Water Use Survey to the extent possible, allowing the state to better monitor the industry’s consumption as it develops.
What Could This Mean for Katy?
There is currently no evidence in the government and university sources reviewed for this article showing that data centers are causing a residential water shortage in Katy.
That distinction is important.
However, Katy sits within one of the fastest-growing portions of the Houston metropolitan area, and Houston is already identified by University of Texas researchers as one of Texas’ major data-center markets.
Katy and surrounding communities also fall within Region H, Texas’ regional water-planning area that includes Fort Bend, Harris and Waller counties.
The 2026 Region H Water Plan already includes major future water-management strategies involving conservation, new surface-water supplies and water reuse. For example, the plan identifies future reuse strategies in Fort Bend, Harris and Waller counties as part of the region’s long-term supply planning.
That means the concern for Katy residents should not necessarily be that a data center somewhere in Texas will suddenly reduce water pressure at their homes.
The more relevant question is what happens if large water- and electricity-intensive developments are placed within the same regional systems serving a rapidly expanding residential population.
Location matters.
A data center using reclaimed wastewater and highly efficient cooling could have a dramatically different impact than a facility withdrawing large amounts of drinking water or groundwater.
Texas Is Beginning to Respond
State leaders have clearly recognized the issue.
In June, Gov. Greg Abbott directed the Public Utility Commission of Texas and ERCOT to take steps intended to prevent data-center infrastructure costs from being shifted to residential electricity customers.
The governor also called for future requirements involving water-efficient cooling, accurate reporting of electricity and water consumption, and protections for neighboring communities.
In August, Abbott said data centers should be required to protect the electric grid, conserve water, respect surrounding neighborhoods and pay their own infrastructure costs.
The Texas Water Development Board is simultaneously working to obtain better information about data-center water consumption because historical state water plans did not separately identify enough data-center-specific water use to fully project the industry’s future demand.
The Question Katy Residents Should Be Asking
The debate over data centers does not have to be reduced to being either for or against them.
Texas stands to gain substantial investment, construction activity, technology infrastructure and high-skilled employment from the industry.
But water is a finite resource.
For Katy-area residents, the most important questions surrounding any future large data-center proposal should therefore be straightforward:
Where will its water come from? How much will it use on the hottest summer days? Will it use drinking water, groundwater or reclaimed wastewater? What cooling technology will it employ? Who will pay for new water and electrical infrastructure? And has that additional demand already been incorporated into the region’s long-term water plan?
Those questions are becoming increasingly important because Texas’ data-center expansion is occurring at the same time the state’s population continues to grow and water planners are preparing for future drought.
The University of Texas research makes one point particularly clear: where and when water is used can be just as important as the total amount consumed.
For communities such as Katy, that may ultimately determine whether the data-center boom becomes primarily an economic opportunity or another major demand on infrastructure that residents are eventually asked to support.
Primary source pages: University of Texas data-center water research, 2027 Texas State Water Plan, and 2026 Region H Water Plan.
