Australia’s East Coast data centre sector is entering a critical phase where questions of water security are becoming inseparable from debates about digital growth. Two recent reports by the ABC highlight the scale of the challenge: in Melbourne, Greater Western Water and Yarra Valley Water are already fielding applications totalling nearly 20 gigalitres annually – volumes equivalent to hundreds of thousands of residents’ consumption.
Melbourne’s Hume City Council has warned that this “tidal wave” of applications risks placing new strains on local infrastructure, housing growth and environmental resources. In a recent interview Hume deputy mayor Naim Kurt said the council found out that about seven data centres are incoming to Hume and there’s another 20 or 30 in the western suburbs alone. Some of these are in fast track processes at ministerial levels, others are only revealed through FOI requests.
In Sydney, modelling suggests the surge in generative AI workloads could push data centres’ share of the city’s water demand to a quarter of total supply within a decade according to the reports. For data centre operators, these figures signal more than a headline issue. They point to a tightening regulatory environment where planning decisions are increasingly scrutinised at multiple levels of government, and where the question of who should shape water allocations – utilities, state authorities, councils, or communities – remains unresolved.
Hume Council has argued that developers bypassing local scrutiny in favour of direct state approvals undermines coordinated long-term planning. In Sydney, planning bottlenecks for housing developments in Macquarie Park have already been linked to high volumes of water secured by approved data centre projects.
Avoiding mistakes made overseas
It is against this backdrop that W.Media spoke with Dr Bronwyn Cumbo, transdisciplinary social researcher and lecturer at the University of Technology Sydney’s TD School. Dr Cumbo’s research focuses on how visions of Australia’s data centre futures can be broadened to incorporate the aspirations and priorities of local communities living alongside data centres, as demonstrated in a recent article in The Conversation.
In that piece, she argued that as Australia rapidly expands its digital infrastructure, there is a “unique opportunity” to avoid the mistakes seen in parts of the United States and Latin America where data centres have been linked to water stress, rising water prices and community pushback by embedding more authentic community participation into planning and industry aspirations from the outset.
Dr Cumbo highlights that data centres are not abstract engines of digital progress but concrete, resource-intensive facilities whose operations intersect with local realities: increased noise, environmental damage, increased urban heat island effect, gigalitre-scale water flows, pressure on the energy grid, and competition with other industries for essential supplies.
Her work stresses that while these facilities underpin economic growth and digital sovereignty, the surrounding communities must be able to influence how they are designed, located, and managed. Transparency, early engagement and place-based planning, she argues, are essential if Australia is to balance digital ambition with environmental and social sustainability.
In conversation with W.Media, Dr Cumbo argues that the rapid growth of data centres risks outpacing Australia’s current systems for allocating and managing water. She stresses that the creation of sustainable and inclusive data centre futures in Australia relies on unveiling and negotiating the priorities of industry, government, and community actors in decision-making processes. In addition, treating water access as purely a technical or state-level planning issue overlooks the wider social and environmental consequences, from stalled housing developments to long-term impacts on ecosystems.
For her, one real challenge is moving beyond the securing of alternative water sources such as desalination or recycled supplies to transparent decision-making processes that reflect the priorities and practices of local councils and communities. Without this, she warns, Australia could find its digital ambitions colliding with the hard limits of living on the world’s driest continent.
W.Media: Greater Western Water and Yarra Valley Water are already fielding applications totalling nearly 20 gigalitres annually — the equivalent of hundreds of thousands of residents. From your perspective, how realistic is it that Melbourne’s current water infrastructure can accommodate this demand, and what risks does it pose for housing and population growth in fast-growing areas like Hume?
Dr Cumbo: The projected water uses of these data centres will no doubt place pressure on water access and allocations to other industries. In Macquarie Park in Sydney, we are already seeing housing development plans being stalled because of the high water volumes being consumed by approved data centre developments.
W.Media: Hume Council has raised concerns that companies are bypassing local scrutiny by going directly to the Planning Minister for approval. Do you think this undermines coordinated long-term planning for water and energy use, and what role should councils have in shaping where and how data centres are built?
Dr Cumbo: Data centres are classified as state significant developments which means development approval sits with the state government. And, water and energy management of these developments sits with the resource providers who are in regular conversations with state government and the developers. The challenges we are seeing are data centres 100 – 500MW (and greater) are a new type of industrial land use and we don’t have policies in place to effectively coordinate data centre clusters that we are seeing. Water infrastructures have also not been designed for the high water volumes required by data centres.
Council can play a valuable role in building community awareness about what data centres are, challenges, opportunities they present to their locality; and in working with developers and fibre-optic cable companies to share place-based knowledge to minimise impacts of development. They can also explore opportunities for community benefit schemes that provide genuine benefits to the community hosting data centres in the long-term.
W.Media: Analysts have spoken about the potential for stormwater or recycled water to relieve pressure on potable supplies. Given that councils like Hume fear data centres will compete with residents for drinking water, how feasible is it for Melbourne’s next wave of data centres to rely on alternative sources from day one?
Dr Cumbo: It is difficult to say as water management decisions and innovations are not openly discussed. The water providers are trying to innovate to cater to the data centre water demands. Freshwater allocations for residents will be prioritized during periods of water scarcity. But other industries that rely on recycled water (e.g. agriculture, parklands) may find themselves competing with data centres for water resources. It depends how water allocations are negotiated and prioritised. One concern is how environmental flows will be impacted. For instance, if stormwater that would usually be discharged into pipes and then the ocean is instead diverted to data centres, that is a potentially efficient reuse of water. But, capturing stormwater that would usually go to local natural areas and groundwater reserves may have a long-term impact on the health of our natural environments and biodiversity.
W.Media: Hume deputy mayor Naim Kurt described the approval process as “opaque,” with limited information about environmental impacts. From an industry standpoint, how can data centre developers build more trust with councils and communities, particularly around water security?
Dr Cumbo: Through greater transparency, open communication and genuine participation of data centre developers, resource managers, government, and community in how the data centre industry is imagined and realised. This is an area I’m exploring in my research. Australia is the driest continent on Earth but we rely heavily on these digital infrastructures to support our modern digital society – it is a complex challenge that will only become more complex in future.
