AI data centers drive water scarcity in Southeast Asia
AI data centers rapidly expanding across Southeast Asia to support growing computing demands are consuming water at unsustainable rates, threatening local water security particularly in hot climates. Governments in Singapore and Malaysia have responded with regulations and investment rejections, but companies are redirecting projects to neighboring countries facing similar resource pressures.
What happened
The AI race has driven global technology companies to establish data center hubs in Southeast Asia, with regional installed data center capacity rising from 10 megawatts in 2021 to 1.3 gigawatts by 2024.
Data centers require intensive cooling systems, causing significantly higher water consumption than traditional cloud computing systems to operate in hot climates.
Reported impact
Research suggests global AI-related water demand could reach 6.4 trillion liters by 2027, with risk of depleting local water resources if water efficiency is not achieved.
In Johor, Malaysia, daily water consumption by data center facilities has begun to exceed the total water needs of thousands of households. Following pressure on resources, Johor state government rejected 30 percent of new data center applications in 2025 on grounds of insufficient infrastructure and water security.
Index analysis
Singapore tightened regulations on data center projects to protect limited resources, causing technology companies to shift investments to neighboring Malaysia and Indonesia, which now face similar sustainability crises.
Projected energy needs for data centers in the region could reach almost 6 gigawatts by 2035, compounding water consumption pressures.
Governance controls
Johor state made recycled water use and liquid cooling technologies mandatory for new data center projects.
Local protests occurred as of February 2026 over the imbalance between economic returns and environmental costs.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.