International Development: Strategies not Data Centres

The most recent Global Economic Prospects report from the World Bank Group analyzes what’s behind the “2025 steady yet unequal growth,” and what is necessary to create jobs and drive development in the years ahead in the developing world. One particular area was the impact of "AI data centers" on local water supplies and how that affects people and local economies. 

The hyped-up AI-Everything environment prevailing today has created an AI investment frenzy, which has developed into a bubble; eventually, things will end badly. And usually, the developing world feels the shocks and suffering more.

Sharon Goldman, in an article in VentureBeat, titled Sam Altman wants up to $7 trillion for AI chips. The natural resources required would be ‘mind-boggling,’ and a Fortune report says that AI tools have fueled a 34% spike in Microsoft’s water consumption; Meta’s Llama 2 model reportedly guzzled twice as much water as Llama 1; and a 2023 study found that OpenAI’s GPT-3 training consumed 700,000 litres of water.

No argument, therefore, can be made that we should tear up the planet, deplete our natural resources, and take an unprecedented risk on something so unproven, "AI", relative to its value to risk differential for humanity. There is no bailout package for destroying the planet and exacerbating global inequalities and geopolitical conflict over land and resources.

The narrative for building AI Data Centres in developing countries is driven by Big Tech. Saying it will contribute to economic growth and prosperity in developing nations. Its contribution, however, will accelerate the depletion of their freshwater resources to cool their enormous server farms, creating problematic imbalances and unacceptable threats to the environment, local populations and economies.

Data centres are not a growth path

Large language models rely on massive infrastructures, land to house thousands of servers running 24/7 to keep the AI infrastructure and ecosystem running. However, this is unrealistic and unsustainable.

Jim Covello, the Head of Stock Research at Goldman Sachs, has emerged as a prominent skeptic of the current artificial intelligence (AI) boom, arguing that the technology is overhyped and failing to produce a "killer app" that justifies its massive cost. And that "building too much of what the world doesn’t need typically ends badly.”

With the rapid speculative building of data centres, electricity use could more than double by 2030 to 945 terawatt-hours (TWh), according to the World Bank Group report When the cloud meets a thirsty world.

At this pace, AI data centres’ freshwater demands will come to rival agriculture, fueling concerns about the adequacy of water resources to sustain local developing economies and their populations, the report says.

In Chile, for example, fierce local opposition, driven by severe drought, is challenging tech giants like Google over their massive freshwater demands for their data centers. Activists and courts alike are highlighting conflicts with local water access for communities, pushing for stricter regulations and sustainable designs in water-scarce areas in Chile.

• Chile is experiencing a prolonged drought, making large-scale water use for data centres cooling unsustainable and sparking public outcry.

• Traditional water-cooling systems in data centres can use millions of litres daily, drawing from local aquifers that supply drinking water and agriculture.

• Environmental groups and residents are protesting, arguing that data centres divert water from essential needs, citing impacts on farming and basic water access.

• Chilean courts have intervened, forcing companies like Google to revise permits and consider climate change impacts, pushing for less water-intensive designs.

Chile has become a hotspot for data centre development due to grid access and fibre, attracting giants like Amazon, Microsoft, and Google. The reality is that Big Tech faces stiff environmental regulation in its home country, so they move to the developing world to take advantage of lax regulation and its need for investment.

In just the past two decades, global freshwater reserves have fallen by an average of 324 billion cubic meters per year, a loss equal to the combined annual flow of Western Europe’s largest rivers. These trends are especially challenging in lower-income countries, where over the last half-century, periods of severe rain shortfall and droughts have increased by 233%, creating major headwinds for economic growth. 

Already over a third of data centre infrastructure is concentrated in areas grappling with water scarcity, namely places where annual net water withdrawals exceed available water.

Unfortunately, it is often the case that corrupt and incompetent governments in these countries compete to attract Big Tech data centres, giving them subsidies and tax incentives, looking out for their own pocket instead of their countries.

This disproportionately puts the tax burden onto local taxpayers, already strained and in need of tax revenue, which could go to health, education, social programs, and infrastructure.

The RISK with Big Tech data centres is two-fold:

1. Developing countries are likely taking enormous economic risks by playing to Big Tech AI data centres with a highly speculative industry, building over capacity, likely a bubble waiting to burst.

   
   

2. The other risk is environmental: water resource depletion, and contamination that tips the water resource balance away from agriculture and the local population/economy to satisfy insatiable Big Tech demand.

In strict socioeconomic terms, cost vs. benefit, the marginal socioeconomic benefit of data centres does not justify the high costs, short and long-term risks to their environments, economies, security and well-being.

Why Strategy as a First Principle for the Developing Economies

Strategy provides a necessary roadmap to navigate high-stakes uncertainty, severe resource constraints, and structural deficiencies that are less common in developed markets. Without a clear strategy, developing nations risk falling into short-term “solutionism” and “reactionism” where reactive, ill-considered, ad-hoc, and fragmented decisions fail to build long-term, sustainable economic growth.

The concept of thinking from first principles encourages a thoughtful bottom-up process…not making assumptions based on existing models, what promoters tell you, or what one believes to be true. Because what you believe is of no consequences, the only thing of consequence is what is real!

First principles thinking is a systematic step-by-step scientific methodology approach to deconstructing problems and seeing them for what they truly are. It helps us make decisions based on reality, not on our belief systems, and puts us on a path to building realistic 21st century strategies for success.

Useful innovation often comes through a process of discovery; a series of steps, and within each progressive step, there must be additional steps of scientific inquiry, tests, contemplation and iterations to complete before moving to the next step. All steps must be covered!

                                                                                                       — Albert Einstein

Developing economies are increasingly attracting large-scale manufacturing and technology infrastructure projects (e.g., hyperscale data centres) under the premise of economic modernization. A long held, often re-calibrated, neoliberal Western theory of development, that is a one way street to boost Western economies growth of the backs of the developing world.

These standalone projects frequently fail to generate meaningful GDP growth but exacerbate environmental degradation and destabilizing of local economies.

Without a strategic framework in place to integrate such projects into broader national interests and development goals, developing economies risk trading short-term corporate gains for long-term systemic vulnerabilities.

Key Challenges

1. GDP Growth Illusion:

Standalone tech infrastructure projects often operate as “enclaves,” similar to "all-

inclusive" foreign owned resorts in the Caribbean, with limited linkages to local

industries or workforce development. Profits and expertise typically flow outward,

failing to stimulate domestic value chains or inclusive growth.

2. Environmental Risks:

Projects like data centres require vast freshwater resources for cooling, directly

competing with agricultural and community needs. Depletion of critical resources

undermines climate resilience and food security.

3.       Local Economic Distortions:

Sudden demand spikes for land, energy, and labour inflate costs for existing

businesses and residents, creating unsustainable market imbalances. Benefits

(e.g., limited temporary jobs) rarely offset displacement or long-term dependency.

Why This Matters

When prioritized without systemic planning, such projects divert scarce public resources, deepen inequities, and prioritize foreign corporate interests over national well-being. The absence of guardrails to align infrastructure with sustainability and equity goals perpetuates a cycle of extraction over transformation.

Strategy options for developing countries to consider:

• Collaborate on drafting principles for FDI (foreign direct investment) that prioritize environmental and social safeguards.

• Analyze case studies of countries that have successfully aligned tech investments with equitable growth.

• Workshop frameworks to assess trade-offs between short-term FDI inflows and long-term sustainability.

These strategic considerations matter because together, they turn reactive policymaking into strategic choice. Without them, developing economies remain in a cycle of “yes to everything” or “no to everything”—both of which cede agency.

6ai software provides developing nation states leaders and teams with a roadmap-building resource—a tailored framework to design strategies themselves, without reliance on big Western consultants who are paid by and represent the interests of the big tech corporations.

The 6ai framework and progressive platform provide customizable Decisioning Matrix for evaluating FDI projects, weighting factors like water-use efficiency, local job multipliers, and domestic value-chain integration. This would ground principles in actionable criteria.

Secondly, it provides Context-Specific Case Analysis, to do the deep-dive into a project in your region (or one you’re assessing). Apply the framework to stress-test its trade-offs, e.g., “How might this data centre’s water needs impact smallholder farmers in 5 years?”

Third, Stakeholder Workshop Design, draft a workshop for public/private leaders to align on non-negotiables (e.g., “No FDI project may consume >10% of a region’s freshwater”) and co-design mitigation strategies.

The Choice Ahead

Developing economies stand at a reckoning: continue chasing foreign investment that drains resources and fragments communities, or demand a new paradigm where technology aligns with sovereignty, sustainability, and shared prosperity.

The path forward isn’t about rejecting opportunity and progress—it’s about applying intelligence and redefining it. By anchoring FDI to binding environmental safeguards, local value creation, and transparent trade-offs, nations can transform infrastructure projects from extractive ventures into engines of equitable resilience.

This is not idealism—it’s about maximizing opportunity, not only to survive, but to thrive in the 21st century! To win for a change!

To governments, communities, and investors: Act decisively. Co-create frameworks that prioritize water over waste, livelihoods over loopholes, and strategy over surrender. The cost of inaction isn’t stagnation—it’s collapse.

The moment to build differently, with strategy, is now!