AI growth and housing: Water crunch fears
As the UK races to become a global hub for artificial intelligence and deliver 1.5 million new homes by the end of the current parliament, a looming water crisis is placing the Government’s twin ambitions on a collision course, says leading national law firm Clarke Willmott LLP.
According to the Environment Agency, the UK will need five billion extra litres of water every day by 2050; regions like the south and south-east, earmarked for AI-driven development, are already facing significant water stress.
Nicola Sutton, a partner in Clarke Willmott’s commercial property team, says the UK must embrace AI to remain competitive; but that the data centres it relies on pose a conundrum, consuming vast amounts of water.
“Data centres play a crucial role in advancing the UK’s AI ambitions but require significant volumes of water, sometimes equivalent to the daily usage of thousands of households,” said Nicola.
“This places considerable strain on regional water supplies, particularly in areas such as the Thames Valley, where both data centre developments and housing projects are concentrated.
“Water neutrality rules, which require new developments to avoid increasing net water use, add another layer of complexity to the Government’s already ambitious housing targets.”
Earlier this year, the Prime Minister set out his blueprint to turbocharge AI growth, declaring a bold ambition to make the UK an artificial intelligence “superpower.”
In parallel, the Government has designated data centres as Critical National Infrastructure (CNI) and launched new ‘AI Growth Zones’, including one in Culham, Oxfordshire.
These facilities will require millions of litres of water each day for cooling, placing even more strain on areas already struggling to meet basic water supply targets.
“Policy makers must take a joined-up approach that supports innovation and growth without placing unsustainable pressure on limited water resources,” added Nicola.
“We also need greater collaboration between tech firms, housebuilders, and water companies to ensure developments are both commercially viable and environmentally sustainable.
“Otherwise, we risk creating a situation where two of the government’s flagship priorities end up in direct competition.
“At Clarke Willmott, we’re supporting clients to navigate the legal and regulatory complexities around water neutrality and infrastructure planning.”
The UK is the third largest AI market in the world, after the US and China. Valued at 72.3 billion in 2024, the UK’s AI sector is larger than any other country in Europe.
For more information please speak to a member of our commercial property team.
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