The Gulf’s trillion-dollar race to become an artificial-intelligence superpower faces the region’s biggest challenge: water.

Data centers powering AI across the United Arab Emirates and Saudi Arabia are consuming water at an alarming rate, with projections showing the region will need 426 billion liters annually by 2030. This surge threatens to turn water scarcity into a critical bottleneck for tech ambitions in one of the world’s most water-stressed regions.

The World Resources Institute ranks the UAE, Saudi Arabia, and Qatar among the most water-stressed countries on Earth, with daily per capita consumption exceeding 500 liters — almost three times the European average. The countries pledged $2 trillion of deals during U.S. President Donald Trump’s Middle East tour in May this year.

The UAE’s new 1-gigawatt Stargate AI campus, backed by OpenAI and Abu Dhabi’s G42, is only the beginning of a massive infrastructure build-out across the region. Saudi Arabia has separately announced plans for 2,200 megawatts of new data center capacity, attracting tech giants including Google, Microsoft, and Amazon Web Services to establish regional hubs.

While these investments promise to transform the Gulf into a digital gateway linking Europe, Asia, and Africa, they come with an environmental cost that could undermine the very growth they seek to enable. The water demands of AI-intensive data centers may force governments to choose between their climate commitments and their technological ambitions.

“The issue of excessive water consumption for cooling in data centers is becoming a significant environmental concern,” Anita Nouri, CEO of Green Growth Planning Consultancy, a Dubai-based sustainability consulting company, told Rest of World. “Traditional cooling systems often rely heavily on large volumes of clean water, placing additional stress on already limited freshwater resources, particularly in water-scarce regions.”

The numbers paint a stark picture of the challenge ahead. Water consumption across data centers in the Middle East and Africa will increase to more than 426 billion liters by the end of the decade from 119 billion liters in 2025, according to research firm Mordor Intelligence. The UAE alone is expected to use 61 billion liters annually by 2030.

To put this in perspective, a single 1-megawatt data center consumes as much as 25.5 million liters of water annually. That’s enough to meet the daily water needs of 300,000 people, making each facility equivalent to the water demands of a small city.

The Gulf’s extreme summer temperatures compound the problem, forcing data centers to rely heavily on evaporation-based cooling systems. GPT-3, OpenAI’s language model that powers ChatGPT, consumes about 500 milliliters of water per 10–50 responses, according to academic research platform arXiv.

“Gulf summers are extreme and water is scarce,” technology analyst and author George Chanos told Rest of World. “Many experts believe that water shortages could limit data center capacity as demand grows.”

The region’s heavy reliance on desalination adds another layer of complexity. Saudi Arabia operates two of the world’s largest desalination plants, providing more than a million cubic meters of water daily, but these oil and gas-powered facilities consume copious levels of energy.

This creates a troubling contradiction for countries like the UAE and Saudi Arabia, which have pledged to lead on both climate action and AI development.

Some operators are experimenting with alternatives, although adoption remains limited across the Gulf. Khazna Data Center in the UAE is piloting treated sewage effluent for cooling, while global operator Equinix uses lake water and geothermal systems in Toronto to reduce consumption.

“We are exploring treated sewage effluent water reuse at some of our facilities,” Johan Nilerud, Khazna’s chief strategy officer, told Rest of World.

Other emerging solutions include closed-loop systems that recycle water and air-cooled setups that rely on outside air instead of evaporation.

Western cloud providers have made ambitious sustainability pledges, with Google planning 24/7 carbon-free energy by 2030 and Microsoft aiming for carbon negativity. Regional implementation, however, has been inconsistent, with few companies disclosing detailed data on water or energy usage for their Gulf operations.

While 90% of Gulf organizations increased sustainability investments post-Covid-19, fewer than 25% track water-specific metrics, according to a report by global real estate consultancy Knight Frank. This lack of transparency makes it difficult to assess the true environmental impact of the region’s digital expansion.

Despite mounting challenges, regional governments remain undeterred in their AI ambitions. Kuwait recently joined a $100 billion AI infrastructure partnership with MGX and Microsoft, even though the country depends almost entirely on desalination for its water supply.

Qatar, which hosts Google Cloud and Microsoft Azure, is exploring floating solar platforms to power integrated water-energy systems. Oman and Bahrain are continuing to invest in digital infrastructure despite their heavy reliance on non-renewable groundwater.

Industry analysts point to a troubling timeline where water demand could outpace supply within the decade. According to projections by regional water management authorities, the Gulf’s current water infrastructure cannot support the planned expansion of AI data centers without significant upgrades or alternative cooling technologies.

“Hot and arid regions like the Gulf are vulnerable,” Chanos said. “Water demand from AI could become a huge issue by 2027 — AI data centers may use more water than entire countries like Denmark, and more energy than countries like France.”

Regional energy grids face additional strain as desalination plants ramp up production to meet growing data center demands. The International Energy Agency estimates that Gulf states may need to double their electricity generation capacity by 2030 to support both AI infrastructure and the desalination required to cool it.

Financial markets are beginning to price in these environmental risks, with some institutional investors demanding detailed water usage disclosures before committing to Gulf tech projects. ESG-focused funds — based on environmental, social, and governmental factors — control trillions in assets, and increasingly view water sustainability as a key metric for emerging market investments.

“We need to innovate and adopt technologies that reduce water dependency,” Nouri said.

The urgency has prompted some Gulf states to fast-track research into atmospheric water generation and advanced heat pump systems.

Early pilot projects show promise but remain expensive and unproven at scale. The UAE’s Masdar Institute is testing solar-powered atmospheric water generators that extract moisture from desert air, while Saudi Arabia’s Neom project incorporates advanced cooling technologies into its smart city blueprint.

Some industry experts warn that water constraints could force operators toward colder, more water-rich locations, potentially undermining the region’s strategic positioning as a global AI hub.

Yet the stakes are too high for regional governments to abandon their ambitions without a fight. The AI industry represents a multitrillion-dollar opportunity to diversify Gulf economies away from oil dependence, making water solutions a matter of national economic security.

Technology companies are responding with increased investment in regional R&D centers focused on sustainable cooling solutions. Microsoft has announced plans for a $1 billion research facility in Abu Dhabi dedicated to developing water-efficient AI infrastructure, while Google is partnering with local universities on next-generation cooling technologies.

“This is the land of innovation and has the will to be first and best,” Nouri said. “This region will find a way to make it happen.”