The Watershed Institute recognizes that the rapid expansion of data centers and artificial intelligence (AI) infrastructure represents both a transformative opportunity and a significant environmental challenge—particularly for water resources, energy demand, and regional sustainability.
Data centers are an unavoidable part of modern life. They enable critical services such as healthcare systems, emergency response, scientific research, financial networks, and the growing suite of AI tools that can help model climate impacts, improve water management, and enhance environmental monitoring. In this sense, digital infrastructure can be a powerful ally in advancing environmental protection and resilience.
However, these benefits come with substantial trade-offs. Data centers are highly resource-intensive, requiring large amounts of electricity and, in many cases, significant volumes of water for cooling. In water-stressed regions or sensitive watersheds, this demand can strain local supplies, impact aquatic ecosystems, and compete with community needs. Additionally, the energy consumption associated with AI and data processing contributes to greenhouse gas emissions when powered by fossil fuels, further exacerbating climate change—the very issue many of these technologies aim to address.
The Watershed Institute is particularly concerned about:
• Water withdrawals for cooling systems that may reduce streamflow or groundwater availability or stress public water systems
• Thermal pollution that may occur in at least two forms:
Discharged cooling water that will affect aquatic habitats
Heat from HVAC systems and generators contribute to the heat island effect
• Closed looped cooling systems, which may require increased need for energy and HVAC systems adding additional burden on the grid and requiring on location power generation.
• Even with closed looped closing systems, there is potential for pollutants to be discharged. There have been reports of the cooling water containing forever chemicals and in one instance bacteria.
• Land use changes and impervious surface expansion that can increase stormwater runoff and degrade water quality.
• The siting of facilities in environmentally sensitive or already overburdened communities.
• 24/7 noise can have impacts on communities and wildlife
• The significant energy needs putting strains on the grid and causing increases in consumers electricity bills.
• The lack of transparency around water and energy use by data center operators.
At the same time, we acknowledge the potential for responsible innovation. Advances will occur that reduce the impacts of these facilities. The transition to renewable energy sources can lower carbon impacts. Strategic siting, strong regulatory oversight, and community engagement can help ensure that infrastructure development aligns with environmental protection goals.
The Watershed Institute believes that the following are necessary to protect our water, environment, and communities from the negative effects of data centers and related infrastructure, but are currently lacking:
• Strong state and local permitting standards that evaluate all of the impacts.
• Mandatory disclosure of water usage, energy sources, and efficiency metrics.
• Prioritization of water-efficient and non-consumptive cooling technologies.
• Incentives for co-location with renewable energy generation and reuse of waste heat.
• Protection of sensitive watersheds and equitable consideration of community impacts.
• Ongoing monitoring and adaptive management to address emerging risks.
As our state wrestles with the oversight of this growing industry, The Watershed Institute along with 60 organizations supports the Pineland Alliance’s call for a moratorium at the State level. We also support updates to municipal land use codes to ban A.I. or hyperscale data centers as permitted uses. There is a growing list of municipalities that have done this. In our watershed the following municipalities that have adopted a ban are: Montgomery, Robbinsville, West Amwell, Manalapan, and North Brunswick. A statewide list of municipal bans can be found at: Data Centers Invading NJ Through Redevelopment Loophole – Pinelands Alliance – Protecting the New Jersey Pinelands and Pine Barrens. Bans will provide both the State and local government time to study the issue and develop meaningful regulation, zoning, and oversight. Without a moratorium or ban, municipalities and the State are very limited in their ability to control where these facilities are located and how they are operated.
As demand for digital infrastructure continues to grow, it is essential that development proceeds in a way that safeguards water resources, supports climate goals, and reflects the needs of local communities. Thoughtful planning and responsible practices can ensure that technological progress does not come at the expense of environmental integrity. The Watershed Institute remains committed to working with policymakers, industry leaders, and community stakeholders to advance solutions that protect our water resources while supporting sustainable innovation.
End Notes
1. https://www.eli.org/vibrant-environment-blog/ais-cooling-problem-how-data-centers-are-transforming-water-use and https://www.elr.info/sites/default/files/files-general/56.Data_Center_Resource_Consumption.pdf
2. Data Centers, Urban Heat, and AI Growth
3. Data Centers Are Contributing to PFAS Forever Chemical Pollution | Article | EESI. and Data centers face a new environmental concern – E&E News by POLITICO
4. https://www.eesi.org/articles/view/communities-are-raising-noise-pollution-concernsabout-data-centers and https://www.techtarget.com/searchdatacenter/tip/Understanding-the-impact-of-data-center-noise-pollutio
