Get the inside scoop on The Narwhal’s environment and climate reporting by signing up for our free newsletter.

This story is part of a Great Lakes News Collaborative series called Cash Flows: Industry, Ecology and the Future of the Great Lakes Blue Economy. The series examines the wealth derived from the waters of the Great Lakes and the ways in which that economy is threatened. This story was originally published by Great Lakes Now

Benton Harbor on Lake Michigan’s southeast coast is known to visitors for its vacation feel and beautiful beaches.

But it’s also one of the poorest cities in Michigan. In recent years, the area has struggled to find the funds to invest in critical infrastructure, most noticeably for its water supply which until recently had tested for dangerously high levels of lead.

So while facing a US$2.5-million annual deficit in operating its water provider system, the city has turned to deep-pocketed multinationals to help bring about change.

Last year, reports emerged that an unnamed company was seeking to build a US$3-billion data centre on 280 acres of land east of the city.

Not everyone backs the move.

“I don’t want this. I don’t think it would be to our advantage right now,” said Reverend Edward Pinkney of the Benton Harbor Community Water Council, who lives about a kilometre and a half from the proposed location.

“There are environmental and security and management issues. Wasted energy, pollution and the noise. Think about the traffic. There are so many things we are concerned about.”

With artificial intelligence and the demand for cloud computing set to grow in the years and decades ahead, technology companies are increasingly eyeing up the Great Lakes region’s comparatively cooler climate and ample water resources. This is because a data centre is filled with computers, and the more information those computers process, the more they generate heat. If that heat is not dissipated, it would lead to system failure. Water can act as a coolant by circulating through the system, and cooler climates help to reduce the energy burden to maintain these sensitive systems. 

The Great Lakes: ground zero for data centre growth

It’s an issue set to affect residents across all Great Lakes states and provinces at a time when federal protections for Great Lakes water are being slashed.

At the time of reporting, of the U.S.’s estimated 3,680 data centres, 847, or nearly one in four, are located in Great Lakes states, according to a count by Data Center Map. In Cleveland, there already are more than 20 data centres within 24 kilometres of Lake Erie, with many more set to come online around the region. 

Data Center Map counts 264 centres in Canada, however, that number is disputed by other sources saying it’s much closer to 340. The Greater Toronto Area along the shores of Lake Ontario is home to 108 data centeres, according to Datacenters.com.

In April 2024, Amazon announced plans to develop around US$11 billion worth of data centre facilities about 32 kilometres from Lake Michigan in New Carlisle, IN. While Google and Meta have announced plans to spend US$2 billion and US$800 million respectively on their own data centre operations in other parts of Indiana.

Similar scenarios are playing out in Great Lakes communities in Illinois, Michigan and beyond.

In Mount Pleasant, WI, Microsoft is building data centers on three separate sites close to the shores of Lake Michigan.

Across the globe, Microsoft’s 300 data centres consume more than 125 million litres of water per facility each year. That’s the equivalent of 15,000 Olympic size swimming pools filled with water at each data centre. While Microsoft’s 2024 Environmental Sustainability Report references goals around construction waste and air filtration at its data centres, there is no reference to efforts to conserve the use of water.

“Most of our data centre facilities in Mount Pleasant will not require ongoing access to large quantities of water. This is because the facilities have been designed with a closed-loop cooling system that employs a combination of chillers and recycled water,” a Microsoft spokesperson told Great Lakes Now.

Water that is used in the closed-loop system — the Microsoft spokesperson couldn’t say how much that would be, though similarly sized systems typically use tens of thousands of gallons — will be drawn from the municipal water system.

Once the system and pipes are filled, the water will remain in the closed-loop system to be reused for cooling.

“The remaining portion of the data centre campus will use outside air and occasionally some water to support cooling when it is very hot,” the spokesperson added.

But climate change is set to further raise temperatures here in the Great Lakes region, as it is around the globe. According to AccuWeather, Mount Pleasant saw 25 days with temperatures of 29 C or higher last year (in nearby Milwaukee there were 15 days and seven days in 1980 and 1981), a trend that’s set to continue in the years ahead.

The relationship between water and tech

With the artificial intelligence needs only set to grow, there’s no getting away from the need for data centres. Every ChatGPT request for a dinner recipe or machine-generated image adds to that demand.

Some experts are suggesting data centres’ workload be timed to coincide with the coolest hours of the day. Closed-loop cooling systems such as those proposed for Microsoft’s Mount Pleasant facilities are another way that water could be used more sustainably.

But others reject the notion that just because there’s no smoke billowing from a data centre that it’s good for the natural environment.

“There may be a tendency to think of data centres as a somewhat cleaner industry than, for example, a large factory,” said Helena Volzer, senior source water policy manager at the Alliance for the Great Lakes, a nonprofit.

“But that’s not quite the case because the water being used will be warmed and also potentially contain contaminants.”

Home to Aurora, one of the fastest supercomputers in the world that weighs in at 545 metric tons, the Argonne National Labs, a joint effort involving the U.S. Department of Energy and several private entities located southwest of Chicago, uses water from the Illinois and Chicago canals for its closed-loop cooling system, as well as Lake Michigan water for “domestic and laboratory purposes.”

The website of the Argonne National Labs stated in October 2022 that “Because Aurora is a liquid-cooled system, Argonne had to upgrade its cooling capacity to pump 44,000 gallons (166,000 litres) of water through a complex loop of pipes that connects to cooling towers, chillers, heat exchangers, a filtration system and other components.”

But a media representative couldn’t say whether the 166,000-litre figure — the equivalent of around 4.5 semi-trailers filled to the top — has increased or decreased in recent years, or whether that is sourced from the Illinois or Michigan canals, Lake Michigan or from somewhere else.

Volzer said there is cause for concern regarding the amount of water that data centres are using (or will use going forward), largely because we don’t know how much that is. 

“Considering that lack of knowledge, alongside existing water use, demands from other water intensive industries (such as semiconductor chip manufacturing, quantum computing, critical minerals mining and agriculture) climate change, and potential population growth driven by the economic development data centres are touted to generate, there is cause for concern that water resources, especially groundwater, could experience strain,” she said. 

In Cleveland, the H5 Data Centers’ facility is a state-of-the-art 33,000-square-metre “co-location facility” serving multiple Ohio business centres whilst availing of the state’s data centre sales tax exemption.

Emails from Great Lakes Now seeking comment on its Cleveland facility’s water usage were not responded to. But whether it directly uses nearby Lake Erie water sources or not, it’s located in a municipal area that does draw water from the lake.

“Where a data centre is pulling [water] from a municipal system, there’s no tracking or reporting requirement. Information I’ve relied upon says that less than a third of data centres are actually tracking how much water they are using; they are not required to,” said Volzer.

“The only time we have information on water usage is when a data centre was pulling groundwater and therefore needed a consumptive use permit.”

What happens to the water after it is used in data centres depends on the type of cooling method deployed. Closed-loop cooling systems typically see the water cooled and recycled, although the cooling element of that process creates an energy demand. Data centres using evaporative cooling systems see more than half the water evaporating, with the rest, being warmed water, discharged into wastewater treatment systems.

“That raises the question of whether we have the wastewater treatment facilities to handle this,” said Volzer.

She adds that Illinois, New York and Minnesota have bills proposed that would require data centres to report water usage.

“But that only comes after the data centre has been sited and is in place and is operating.”

Experts say non-disclosure agreements signed by the involved parties mean that the amount of water proposed to be used at a new data centre is often unknown at the outset of a project. Hyperscale data centres that use evaporative water cooling systems see more than half the water used disappear into the atmosphere as it is heated. And while the closed-loop cooling systems such as those proposed by Microsoft in Mount Pleasant don’t need a constant supply of new water, they present a massive load on local energy infrastructure, which in turn regularly rely on water for cooling. 

“We don’t know and can’t calculate what percentage of that is being driven by data centre growth,” said Volzer.

‘It’s the definition of putting people first’

In a time when the digital world and artificial intelligence appear set to increasingly shape our futures, getting on the data centre train is seen as important for many communities so as not to be left behind.

For towns in southwest Michigan such as Benton Harbor, offshoring and technological advances in past decades have gutted a once-thriving manufacturing sector that served as a cornerstone for thousands of jobs. Today, scores of Michigan communities have yet to bounce back.

“It’s the economy of the future. As we are looking at what’s next for us in southwest Michigan, the knowledge economy is where you want to be,” said Representative Joey Andrews, who has sponsored legislation facilitating the development of enterprise data centres in Michigan.

“These are huge property taxpayers everywhere they go, and Benton Township is a pretty low-income community. This would represent a pretty massive windfall for the township in terms of their tax base, as well as [for] the school district, which is one of the poorest in the state.”

He said that construction jobs could also be a huge bonus for a community where the poverty rate is well above 20 per cent. Meanwhile, the Benton Harbor water treatment system operates at only around 10 per cent of capacity because of population and manufacturing losses.

“There’s actually a ton of water capacity in the Benton Harbor area right now to the point where the water treatment plant is actually on the verge of bankruptcy because they don’t have enough water customers to sustain the size of the operation that was put up there decades ago. I think this actually represents a potential saviour for the water system.”

In 2023, Michigan vowed to source 100 per cent of its utility scale energy from renewables by 2040, although some environmentalists say new laws encouraging data centres could thwart that goal.

“If people are saying ‘Put the people first,’ they should want the enormous taxpayer who will create a ton of construction jobs and potentially bail out the water treatment centre and the local school system,” said Andrews.

“It’s the definition of putting people first.”

The Great Lakes-St. Lawrence River Basin Water Resources Compact, with limited exceptions, protects communities from diversions of Great Lakes water, sets water conservation and efficiency goals and establishes a reporting system to track water usage.

Observers such as Volzer don’t see that as coming under threat by the growing presence and pressure on water resources posed by data centres.

What’s more, the types of technological advances proposed by Microsoft in Mount Pleasant, which has promised to build a 250-megawatt solar array in Wisconsin, could cut down on water demand.

But in some Great Lakes communities, opposition to data centres has fuelled real action.

In March, the city of Valparaiso, IN, abandoned plans to facilitate a data centre following significant opposition from locals.

What’s more, market dynamics are constantly shifting, meaning multibillion-dollar projects, whether to build data centres or semiconductor plants, are often the first to be put on pause by major multinationals. In December, Microsoft announced that work on parts of its proposed data plant at Mount Pleasant would be paused to “redefine its data centre design.”

As such, experts say it’s difficult to put a number on how many more data centres are set to come online across the Great Lakes region in the years ahead.

But with the global artificial intelligence industry set to be worth more than US$390 billion by 2030, for communities struggling with a lack of funds and outdated infrastructure, there may be no other choice.

Last August, Benton Harbor city authorities tried to convince state regulators to provide tax cuts that would help the proposed data centre project come to fruition. In November, Michigan lawmakers approved a bill that exempted major data centres from sales and use taxes until at least 2050, and in January, Governor Gretchen Whitmer signed the bill.

“In that package, if a data centre is going to be availing of those incentives there’s a requirement that the data centre hook up to municipalities with existing capacity,” said Volzer.

For Pinkney, that likely presents challenges for Benton Harbor residents and leaders.

“The tax breaks [for the data centre company] are going to be huge. There’s no real plus, for me,” said Pinkney.

“I believe that regardless of what we think or what we do, it’s going to happen. Because the powers that be want it.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.