Nov. 19, 2025 – Artificial intelligence (AI) is thirsty. Will there be enough water to go around?

The Alliance for the Great Lakes in August raised the issue in its report, A Finite Resource: Managing the Growing Water Needs of Data Centers, Critical Minerals Mining, and Agriculture in the Great Lakes Region.

Without planning for water availability, the nonpartisan nonprofit organization explained, “the region is simply not prepared to manage the competing and overlapping demands that may soon lead to more conflict over water resources, especially groundwater.”^[1]

Nondisclosure agreements, which developers typically ask governments to sign, make planning more difficult, the report said. The amount of water to be used may not be publicly known.^[2]

The planning needs to be done now, the report urges. Great Lakes states are promoting themselves with tax incentives as a “blue economy” of ample water.^[3]

Wisconsin, with 32 data centers and more in the works, is one of those states.^[4]

The issue of water supply for data centers is “emerging now from being something that’s under the radar to something that a lot of people are concerned about,” said David Strifling, Director of the Water Law and Policy Initiative and associate professor at Marquette University Law School.

Hyperscale

Increased optimization of AI, cryptocurrency mining, cloud computing, and other computer applications create demand for these facilities described as “hyperscale.”^[5]

They can cover more than 10,000 square feet and contain more than 5,000 servers with the fastest computer chips, requiring powerful cooling systems.^[6]

Operating 24 hours a day, the facilities continuously require electricity – and depending on the type of cooling system, water as well.^[7]

The Alliance’s report said evaporative cooling, “the most common method,” needs between 1 and 5 million gallons per day (gpd).^[8]

That’s not alarmist. A 2023 study reported that Google’s domestic data centers in 2021 used 12.7 billion liters of fresh water for cooling.^[9]

A 2024 update reported that “the boom in ChatGPT queries helped bring Google’s water consumption to more than 30 billion liters.”^[10]

Closed-loop cooling technology significantly reduces data center water demand, but increased electricity to run those systems adds water burdens at the generating plant.^[11]

Data Centers – and Tax Exemptions

Wisconsin’s most prominent data center project rises in the Town of Mount Pleasant, near Racine, where Microsoft has bought 1,345 acres of land, originally planned for the proposed Foxconn, Inc. liquid crystal display (LCD) factory site.^[12]

The data center’s first phase received approval in April 2023. Microsoft’s investment grew from an initial $1 billion, to $3.3 billion a year later, to $7.3 billion in September with a planned second data center.^[13]

The total could reach $10 billion because current projects leave room for more.^[14]

Microsoft plans to “use recycled water by employing a closed loop cooling system” that needs water only at startup, according to Microsoft’s May 10, 2024 press release.

The Wisconsin Department of Revenue lists data centers at Mount Pleasant, Port Washington, and Verona as certified for a state sales tax exemption.

2023 Wis. Act 19 created the exemption on tangible personal property in Wis. Stat. section 77.54(70) for construction of data centers certified by the Wisconsin Economic Development Corporation (WEDC).

The exemption reduces the cost of buying materials to build a data center.

Critical to receiving WEDC certification, under Wis. Stat. section 238.40 the center must “create a minimum qualified investment in this state … within 5 years” from certification.

The investment must add from $50 million for a county with a population not greater than 50,000 people to $150 million for a county with a population greater than 100,000 people.

Why Worry?

Wisconsin has 15,074 lakes, more than Minnesota’s advertised 10,000 lakes, although less than equivalent water bodies in Minnesota, and is shoehorned between two Great Lakes.^[15]

If you want a high-capacity well, which pumps more than 100,000 gpd, the Wisconsin Department of Natural Resources (DNR) will review a permit application under Wis. Stat. section 281.34.

The same amount can be withdrawn, with a permit, from the Great Lakes.^[16]

If you want to remove at least 2 million gpd, whether from surface or groundwater, the DNR regulates that under Wis. Stat. section 281.35.

The DNR may set conditions in the permit to mitigate known local harms.^[17]

One can withdraw at least 5 million gpd from a Great Lake as long as members of the Great Lakes Compact – all the states and Canadian provinces in the Great Lakes water basin – agree.^[18]

One can even divert water outside of the Great Lakes basin with compact member approval.^[19]

Since the Northwest Ordinance of 1787 and written into the Wisconsin Constitution at article IX, section 1, the state has jurisdiction on navigable waters, and “the carrying places between the same, shall be common highways and forever free.”

Wisconsin water disputes are constitutional issues.

The Wisconsin Legislature delegated some of those Public Trust Doctrine duties in Wis. Stat. chapter 281, which gives the DNR “broad authority and a general duty” to regulate the “waters of the state,” including high-capacity wells.^[20]

Even after the Legislature sought to contain permit conditions to statutory terms, however, the Wisconsin Supreme Court affirmed that broad statutes, such as Wis. Stat. sections 281.12 and Wis. Stat. sections 281.34-.35, establish DNR’s duty.^[21]

Public Trust Doctrine rights that include recreation, enjoying the scenery, and fishing^[22] – another Wisconsin constitutional right^[23] – should make the protections watertight.

That’s only if they come into play.

‘Don’t Have to Disclose’

The problem is that in most instances, a proposed data center “will connect with a municipal water system,” Strifling explained. “Where that’s the case, they don’t have to disclose their water use.”

The municipality likely has capacity so it wouldn’t need further authorization, Strifling explained.

Racine, which will supply water to the Mount Pleasant data centers, “has authorization from the state to withdraw 60 million [gpd] from Lake Michigan,” Strifling said.

Racine is using only about 18 million gpd of its authorization, Strifling said, because “a lot of their heavy-water-use industries have closed over the years.”

“If the data center is located within the service area of a Great Lakes basin municipality, many of them have significant space in their water allocations, their permitted water allocations, to supply a number of these centers,” Strifling said.

A similar surplus exists with water authorization for Port Washington, which approved construction of a nearby data center to hook up with the municipal water system, said Michael Greif of Midwest Environmental Advocates, Inc., in Madison.

“They’re able to add a large new user without a modification to any existing permits or any new permits,” Greif explained.

Whether those authorized amounts of water can be withdrawn isn’t certain.

“My guess is that an analysis has not been done for every community,” Strifling said, “and then if Racine pushed the pedal to the floor and took 60 million gpd from the lake, what the impact of that would be is not fully known.”

The lake can handle one data center, Strifling said, but “dozens or hundreds,” maybe not.

‘A Good Story to Tell’

Even if it were willing, a municipality or economic development entity may believe it cannot release the information. Typical data center development often includes nondisclosure agreements that hide water usage estimates as a trade secret.

The Wisconsin Public Records Law (Wis. Stat. sections 19.31-.39) establishes as public policy “that all persons are entitled to the greatest possible information regarding the affairs of government and the official acts of those officers and employees who represent them.”^[24]

Trade secrets are an explicit exception.^[25]

Wisconsin courts have said little about the exception. State v. Beaver Dam Area Development Corp., 2008 WI 90 ¶ 82, said the most, noting that “[t]he public records statutes also contain provisions which may prevent disclosure of information important to economic development.”

Milwaukee Riverkeeper, Inc., asked Racine on Feb. 4 for public records about the estimated water use of Microsoft’s Mount Pleasant data center, according to its complaint before Racine County Circuit Court.

After six months of communications with the city, Milwaukee Riverkeeper still didn’t have the records, the complaint alleged.

On Sept. 15, Midwest Environmental Advocates, Inc. filed the complaint seeking a writ of mandamus to release the records that the city and its water utility had “arbitrarily and capriciously delayed.”

The city released the information on Sept. 16,^[26] and the case was voluntarily dismissed.

The numbers on the one sheet of paper revealed no surprises, Greif said, “but it was still good to obtain the record and be able to confirm statements that Microsoft had put out in a press release” with an official source.

The delay in release, however, can be harmful, Greif said, because estimates can change as development progresses. In some cases, the information may not be available in time to affect the project.

“It’s hard to understand exactly why they protect that information so closely,” said Greif, who has noticed data center developers securing other details, such as energy use.

When the numbers came out, it was “a good story to tell,” Strifling said.

“I was actually very surprised at how low it was.”

The data center’s closed-loop cooling system will need an estimated 234,000 gpd at its peak and an annual total of 2.8 million gallons per year – with 2.0 million gallons per year returning to Lake Michigan, Strifling said.^[27]

“That’s very low compared to that 365 million-gallon estimate presented in the Alliance for the Great Lakes report.”

Endnotes

[1] Helena Volzer, Alliance for the Great Lakes, A Finite Resource: Managing the Growing Water Needs of Data Centers, Critical Minerals Mining, and Agriculture in the Great Lakes Region 5 (Aug. 2025), available at https://greatlakes.org/wp-content/uploads/2025/08/AGL_WaterUse_Report_Aug2025_Final.pdf (last visited Nov. 3, 2025).

[2] Id. at 34.

[3] Id. at 5.

[4] Joe Vanden Plas, “Data Centers Spark Heated Debate,” In Business Madison, Oct. 1, 2025, available at https://www.ibmadison.com/industries/technology-biotech/data-centers-spark-heateddebate/article_d696af4f-ff0e-4ffb-b5c3-63336dde04e2.html (last visited Nov. 3, 2025).

[5] Volzer, supra note 1, at 17.

[6] Id.

[7] Id.

[8] Id.

[9] Vanden Plas, supra note 4.

[10] Id.

[11] Id.

[12] Id.; Rick Barrett, “Microsoft’s Massive Data Center Opens New Era in Racine County After Foxconn Disappointment,” Milwaukee Journal Sentinel, 10:42 a.m., Sept. 13. 2024, available at https://www.jsonline.com/story/money/business/2024/09/13/microsofts-been-a-comeback-project-since-foxconn-fell-short/74922671007/ (last visited Nov. 3, 2025).

[13] Barrett, supra note 12; Ricardo Torres, “Microsoft Plans $4 Billion Expansion of Racine County Work for an Advanced AI Data Center,” Milwaukee Journal Sentinel, 1:21 p.m., Sept. 18, 2025, available at https://www.jsonline.com/story/money/business/2025/09/18/microsoft-plans-4-billion-addition-to-racine-county-data-center/86165724007/ (last visited Nov. 3, 2025).

[14] Torres, supra note 13.

[15] Jim Higgins, “Everything You Should Know About Wisconsin Lakes From the Largest to the Deepest, Milwaukee Journal Sentinel, 6:00 a.m., June 29, 2022, available at https://www.jsonline.com/story/life/2022/06/29/wisconsin-lakes-biggest-deepest-clearest-largest-manmade-most-common-name/7663505001/ (last visited Nov. 3, 2025).

[16] Wis. Stat. section 281.346(4m)-(4s).

[17] Wis. Stat. section 281.34(5) (setting conditions for groundwater permit); Wis Stat. section 281.34(7) (allowing modifications or rescission because not in conformance with groundwater permit); Wis. Stat. section 281.346(4s)(dm) (allowing limits to take into account groundwater protection and management areas).

[18] Wis. Stat. section 281.343(4j)-(4L), (4p)-(4r) (standards in compact); Wis. Stat. section 281.346(5)(L)-(m) (requiring compact prior notice and review); Wis. Stat. section 281.35(5)(b) (requiring consultation under compact); chapter NR 860, Wis. Admin. Code (permit regulations).

[19] Wis. Stat. section 281.343(4m)-(4n) (prohibitions and exceptions in compact); Wis. Stat. section 281.346(4) (establishing prohibition and permit requirements in statute); chapter NR 851, Wis. Admin. Code (regulations for managing diversions).

[20] Lake Beulah Mgmt. Dist. v. State of Wis. Dept. of Natural Res., 2011 WI 54 ¶ 39.

[21] Clean Wis., Inc. v. Wis. Dept. of Natural Res., 2021 WI 72 ¶¶ 21-26.

[22] Lake Beulah Mgmt. Dist., 2011 WI 52 ¶¶ 31-32 (summarizing Public Trust Doctrine cases).

[23] Wis. Const. article I, section 26.

[24] Wis. Stat. section 19.31.

[25] Wis. Stat. section 19.36(5) (referencing the definition of trade secret in Wis. Stat. section 134.90(1)(c)).

[26] Torres, supra note 13.

[27] Id. (reporting release of estimated water consumption amounts).