Queretaro Leads Mexico’s Data Center Boom, Faces Water Concerns

Mexico’s rural landscape is undergoing a reconfiguration to host a growing data center industry, with Queretaro turning into the primary hub for the industry investments. The development drives the digital economy but raises concerns about resource sustainability and regional social impact.

The primary motivation behind this transformation is to attract high-value foreign direct investment to position the state as a regional leader in digital infrastructure. Back in 2023, Mauricio Kuri, Governor of Queretaro, announced the transfer of a 518,470m2 unused state plot for a project by the technology corporation CloudHQ. "The government remains the owner; [the land] is loaned for a significant time to a company that will bring US$3.6 billion," Kuri said at the time.

The data center industry in Mexico is in a phase of accelerated expansion, with the intention to reach a 1.516MW capacity by 2030. Queretaro is the epicenter of this activity, with cumulative investments reaching US$15 billion since 2015 and over 15 facilities in operation. Global corporations such as Amazon Web Services (AWS), Microsoft, Google, and Equinix have established operations in the state.

This momentum is projected to have a significant impact on the national economy. According to figures from the Mexican Association of Data Centers (MEXDC), the industry is expected to contribute 5.2% of the national Gross Domestic Product by 2029, equivalent to about US$73.54 billion.

The selection of rural land for these projects is strategic. These locations offer logistical advantages that are critical for operational viability. They provide vast, contiguous plots of land required for buildings, electrical substations, and cooling systems. These sites are often near existing electrical infrastructure, which facilitates access to power. Access to water, an essential resource for cooling servers, is also critical in site selection.

However, this growth presents challenges, particularly regarding natural resource management and associated regulations. Water consumption is a critical issue. In Queretaro, data centers draw from the Valle de San Juan del Rio aquifer, which in July recorded a deficit of 56.8 billion L, reports Expansion.

In response to these conditions, some corporations are adapting their technology. Paula Bellizia, Vice President, AWS, tells Expansion that the company's facility will use an air-based cooling system to minimize water consumption. "We know that Queretaro is a water-stressed area," says Bellizia.

The regulatory environment is also evolving. In 2022, the Queretaro government passed the “Water Law,” that allows for the concession of water services to private companies. While the state government states the law seeks to guarantee supply through a different management model, opponents and activists have described it as a form of privatization. MORENA Deputy Ulises Gómez later introduced a proposal to create a special commission to investigate these concessions.

Incentive packages are another key driver for locating these projects in rural areas. Robert Harrington, a community development expert, writes that property tax reductions, streamlined permitting, and workforce training programs can influence the site selection process for technology corporations. 

Activists including Pamela Siurob and Maria de Jesus Ibarra argue that data centers worsen the state's critical water shortage. They also criticize what they describe as a lack of government transparency regarding the environmental impacts and are calling for public forums with specialists. 

The long-term success of Mexico's consolidation as a data center hub will depend on balancing economic growth with sustainable resource management and transparent governance.