The digital revolution sweeping the globe is often credited with “greening” the world economy. While breakneck technological transformation has indeed provided environmental benefits ranging from improved climate monitoring to greater manufacturing efficiency, it has also produced green downsides that some critics say are beginning to weigh to a disproportionate degree on Latin America and other developing regions. Prominent among these is voracious demand for inputs, particularly electricity, water, and metals, that developed countries are increasingly looking to developing nations to supply to keep the revolution going. With the production of these inputs often coming at the expense of the needs of ordinary people in developing countries, some analysts are declaring a new era of “data colonialism.”

A prime example, they say, is artificial intelligence (AI), which is experiencing lightning-fast growth as the automation it enables cuts labor costs and helps workers better harness all the information at their disposal. AI’s benefits are undeniable, but all of the new data underlying them must be stored in the “Cloud” which, despite the name, is located on the ground, in roughly 100 million computer servers. Most of these servers reside in vast data centers, each housed in a gigantic warehouse covering many acres. Increasingly, these complexes are being sited in the developing world—particularly Latin America, which analysts forecast will be the world’s fastest-growing market for data-center development over the next five years.

The round-the-clock centers suck up massive amounts of electricity to power their computers and water to cool them. The number of the world’s centers is mushrooming, with Meta, Microsoft, Google and Amazon all announcing big expansion plans. Analysts predict that globally, energy demand from data centers could more than double over the next decade. Some experts believe that AI energy demand could overwhelm the U.S. power grid over the next decade. Water demand could skyrocket, too. “The more virtual we become, the more water we need,” explains Pablo Gámez Cersosimo, a Costa Rican researcher specializing in technology and biodiversity. “It is the water that makes virtuality possible.”

Says Venkatesh Uddameri, professor and director of the Water Resources Center at Texas Tech University: “The typical data center uses about 3-5 million gallons of water per day—the same amount of water as a city of 30,000-50,000 people.”

The technology industry downplays such concerns, with Microsoft founder Bill Gates saying earlier this year: “Let’s not go overboard” on worries about AI resource use. Gates argues that by increasing energy efficiency, AI would more than compensate for its heavy energy use.

Others are skeptical. “Gates’ quote reflects the type of utilitarian logic that took us to the climate crisis,” says Sebastián Lehuedé, a lecturer in Ethics, AI & Society from King’s College London. “It seems to reflect the dominant thinking in Silicon Valley whereby environmental damage is a mere ‘externality.’”

Until recently, most data centers have been located in the developed world, but the IT industry is moving to the developing world, and increasingly to Latin America. While many communities in Latin America are struggling to secure access to sufficient supplies of drinkable water, technology companies are planning to build new, potentially water-intensive projects there.

Though the investment has been welcome in financially strapped Latin America’s business and government circles, it has generated public pushback too. In mid-2023 people in the Uruguayan capital of Montevideo noticed a strange taste in their drinking water. This was because the State Sanitary Works Administration (OSE), the body in charge of the country’s water supply, had begun to add brackish water from the Rio de la Plata to supplement the supply from the main reservoir, which was nearly empty.

Such drastic action was needed because for the previous three years the country had suffered a series of severe droughts. (See "Drought takes toll in Uruguay, exposing vulnerability" —EcoAméricas, May 2023.) The droughts had alarmed a population accustomed to abundant rainfall, and community groups and other civil-society organizations became concerned about plans to build water-guzzling data centers.

Protests erupted early in 2023 over Google’s plan to build a large data center in the department of Canelones in the south of the country. In July 2024 the environment ministry approved the project after it had been reformulated to reduce water consumption with a system of “chillers” that use air instead of water. Such systems, however, cannot yet handle heavy processing demands and must be used in conjunction with water cooling, experts say. Carmen Sosa, a campaigner with the Commission in Defense of Water and Life, a grassroots coalition, is not reassured. She says the government was giving priority to corporations at the expense of local residents, who protested with the slogan, “No es sequía, es saqueo!” or “It’s not drought, it’s pillage!”

The droughts caused heavy losses in the agricultural sector, the country’s biggest industry, with soy its main product. Since then, rains have filled reservoirs, and agriculture has recovered, but the fragility of the country’s water supply was clear. Warned the World Bank in a 2021 country analysis: “Uruguay is highly vulnerable to climate change and climate variability.”

Communities in other Latin American countries, some of which are far more vulnerable to drought than Uruguay, also worry about data center expansion. “We walk for the water we need,” Juan, a middle-aged man born in the Indigenous rural community of Maconí in Mexico’s Querétaro state, told Ana Valdivia, an AI expert from the U.K.’s Oxford Internet Institute, in 2023. “If we don’t walk, who will give it to us? It’s a four-hour journey each day to fetch water.”

Data-center expansion is planned for Querétaro, even though it was the Mexican state that experienced the greatest drought in early 2023. “Querétaro is already hosting 10 functioning data centers, and plans to install 18 more, some of them to support the growing demand of ChatGPT,” says Valdivia. “Data centers are extracting drinking water for their economic businesses, whereas Juan has to walk almost a day to water his beans and nixtamal [used to make tortillas].”

Most of the data that needs servicing by centers comes from the developed world, so Mexico is ideally situated for such processing, explains Valdivia, due to its location between the United States and Central and South America via undersea cables. Chile is also at the forefront of transnational data-center investment, chosen by Google in 2018 as its regional hub. Sebastián Piñera, Chile’s president at the time, expressed delight, saying it was an important step away from the country’s longtime dependence on copper mining. But the enthusiasm was not universally shared. Residents of Cerrillos, a suburb of Santiago, voted against construction of a data center in a Feb. 2020 referendum. They were worried about the amount of water to be used in its cooling towers—169 liters (45 gallons) per second—in a region long afflicted by drought. Though not binding, the referendum persuaded Google to employ a less water-intensive cooling system. With redesign work still underway, it is not clear how much more water-efficient the new plant will be.

Data-center expansion is not the only consequence of the digital revolution. Competition between tech giants to produce faster and ever more powerful devices is leading to unbridled demand for more sophisticated semiconductors—an essential component, for instance in smartphones—with each new generation of chips requiring more energy and water in the manufacturing process.

Most experts acknowledge semiconductors can increase energy efficiency in manufacturing and other sectors, thus benefiting the environment by helping to reduce emissions of greenhouse gasses and other pollutants. Nordea, the Finland-based financial services company, refers to semiconductors in its mission statement as “a central component of the green transformation for harnessing, converting, transferring and storing renewable energy with minimal loss of power.”

But increased efficiency fails to offset the environmental impact caused by rocketing demand for—and production of—semiconductors, whose sales are projected to grow from US$611 billion in 2023 to $2 trillion by 2032. Making semiconductors is one of the electronics industry’s most water-intensive activities, with fund managers warning investors the sector contributes to a growing threat of water shortages. Chip making also involves the use of over 400 chemicals, creating hazardous waste and potential for pollution of water sources.

About a decade ago, some semiconductor production moved away from the United States to lower-cost Taiwan; but in 2022, amid fear of overreliance on China, the U.S. Congress passed the CHIPS Act, which provided funding to boost domestic production. Latin America, seen as a link in a developing, U.S.-centered supply chain, is a beneficiary.

Both Brazil and Mexico are vying to expand their role, but Costa Rica already has laid a foundation for semiconductor development in the Americas. Costa Rica became a chip maker after U.S.-based Intel began investing in the country in 1986. Though it was hurt by the shift of manufacturing to Taiwan, it is expected to make new gains with the United States now seeking suppliers closer to home.

“The United States views Costa Rica as a partner in ensuring the semiconductor supply chain can keep pace with the digital transformation underway,” Cynthia Telles, the U.S. ambassador to Costa Rica, said in a July 2023 announcement of the partnership.

The challenge is that almost all of the country’s energy comes from renewables, mainly hydropower and some wind. In 2023, a severe drought depressed Costa Rica’s hydropower output, forcing greater use of thermal power stations. Critics fear that increasing energy and water demands posed by more data centers and semiconductor plants will exacerbate such pressures. “There is an absence of critical thinking, of national-level debate, about the environmental impact caused by the semiconductor industry,” says Gámez Cersosimo.

Another new product promoted as part of the “greening of the world economy” is the electric vehicle (EV). Its development is indirectly linked to AI, which is being used to provide realistic driving-range estimates for battery-powered driving, reducing ‘range anxiety.’

By the end of 2023 there were 40 million electric vehicles on the world’s roads, most of them in China, Europe and the United States. Overall, sales have been buoyant, with 35% more EVs sold in 2023 than in 2022. It is estimated that by 2035 there will be 525 million EVs in circulation, about a quarter of all vehicles. The UK Department of Energy estimates that the carbon pollution of electric vehicles is 60% lower than that of gasoline-powered cars. But electric vehicles also require inputs whose production causes local environmental problems. For instance, growing mining in Latin America of lithium, a key ingredient in electric-car batteries, is fueling environmental and social tension. (See "Worry in ‘Lithium Triangle’ about mining impact" and "Court checks lithium-mining momentum in Argentina" —EcoAméricas, May ’23 and May ’24, respectively.)

While lithium is found all over the world, Chile, Argentina, and Bolivia—together referred to as the “Lithium Triangle”—are estimated to possess over half of the world’s lithium beneath their Andean salt flats. The world’s biggest lithium deposit is found in Bolivia’s Salar de Uyuni, the world’s largest salt flat, which spans 10,000 square kilometers (4,000 sq. miles). So far, though, most lithium mining is occurring in Chile’s Salar de Atacama, the biggest salt flat in the country’s northern Atacama Desert region. Companies extracting lithium in the Atacama are joining those already mining copper to place additional demands on the region’s water supply, hampering local farmers’ ability to grow crops and sustain livestock herds.

The cheapest way to extract lithium is by drilling holes in the salt flats to pump salty, mineral-rich brine to the surface. The water is left to evaporate in giant shallow ponds. After a year or two, the mixture is filtered and lithium carbonate, the input needed for the electric batteries, is removed. The process uses a great deal of groundwater, damaging local ecosystems and drawing protests from Indigenous communities in the region. Says James Blair, associate professor in geography and anthropology at California State Polytechnic University: “The communities suffer a slow violation that creates the conditions for ecological exhaustion.”

While new technologies are expected to boost environmental sustainability eventually, many experts worry that in the nearer term, data-center development and electronics manufacturing will only worsen the world’s ecological and climate predicament unless their impacts are carefully addressed.

“Although new technologies [to substantially increase environmental sustainability] may become relevant by 2100, the number operating at scale in 2050 will be very few,” says Julian Allwood, professor of engineering and the environment at Cambridge University. “Probably we’ve got to deliver on climate change with today’s technologies.”