As cloud and AI demand accelerates, the environmental footprint of datacenters is under intense scrutiny. Microsoft has released new details on its two-decade effort to reduce water intensity, reporting a nearly 90% improvement in Water Use Effectiveness (WUE) since its first-generation facilities launched in the early 2000s.
The company’s average WUE dropped from 2.3 liters per kilowatt-hour (L/kWh) to just 0.27 L/kWh in 2025. This metric measures how much water is consumed relative to the energy processed, a key indicator of efficiency for hyperscale infrastructure.
#1 Zero-water cooling for AI workloads
Microsoft states that approximately 90% of its owned datacenter fleet now operates on low- to zero-water cooling systems. The shift began with direct air cooling and evaporative assist technologies adopted as early as 2008, which use water only when outside temperatures exceed 85°F (29.4°C).
In 2024, the company introduced a new datacenter design specifically optimized for AI workloads that consumes zero water for cooling during operations. This system uses closed-loop, direct-to-chip cooling to manage precise zonal temperatures without evaporative loss. As these facilities come online, they are expected to further drive down the overall water intensity of Microsoft’s global footprint.
#2 Modernizing legacy facilities
Design innovation is only part of the strategy; operational tweaks in existing buildings are also yielding results. Microsoft is refining temperature and humidity setpoints to prevent overcooling and using real-time weather data to audit water usage against design expectations.
These adjustments have had measurable impacts. In its Phoenix, Arizona datacenters, these advancements led to a 23% year-over-year improvement in WUE during fiscal year 2025 alone. The company is now rolling out similar operational improvements across its direct-evaporatively cooled facilities worldwide.
#3 Leveraging non-potable and recycled water
Where water use is unavoidable, Microsoft prioritizes non-potable sources to spare municipal supplies. In key locations like Quincy, Washington; Singapore; and San Antonio, Texas, the company leverages 74%, 99%, and 79% recycled or non-potable water, respectively.
Rainwater harvesting is also expanding. Systems are now operational in the Netherlands, Sweden, and Ireland, with plans for Canada, the UK, Finland, Italy, South Africa, and Austria. New facilities in Quebec are designed to collect significant volumes of rainwater annually, offsetting withdrawal needs even further.
#4 Community investments and replenishment
Beyond its own walls, Microsoft has invested more than $500 million in over 75 water and wastewater infrastructure projects since 2020. These funds support local utilities and community resilience, such as a $25 million upgrade near Leesburg, Virginia, to ensure local ratepayers do not bear the cost of supporting datacenter operations.
The company also reports reaching its water positive milestone in FY25, meaning it replenished more water globally than it withdrew. This includes projects like AI-enabled leak detection in Arizona and Nevada, and wetland restoration in the Midwest to recharge groundwater aquifers.
What this means for you: While most Windows users won’t see a direct change in their OS experience, these infrastructure improvements help stabilize the cloud services that power Microsoft 365, Azure AI, and Xbox Live. Efficient cooling reduces strain on local water resources, potentially lowering long-term operational costs and environmental impact associated with the digital tools you use daily.
Source: The Official Microsoft Blog
Over to you: Do you think tech companies should be required to disclose their water usage metrics alongside carbon footprints?
