A recent datacenter proposal near me was going to be built on a ~35 acre site. The entire site projected to use ~300 gallons of water a day when fully operational. That's including toilets, irrigation, etc. A household on a quarter acre lot in that area often uses 10-15,000 gallons of water in a month. 35 acres cut into quarter-acre-ish lots means a bit under 140 households. We'll cut it down and say 100 after streets and what not. That lot being a neighborhood like the others nearby would probably use at least a million gallons of water in a month, about 33,300+ gallons a day.
https://www.brookings.edu/articles/ai-data-centers-and-water...
[0] https://fieldreport.caes.uga.edu/publications/TP121/how-data...
Your government.
And I don't know why you put allow in quotes. This is a matter of laws and regulation, so it is used in its most literal meaning:
Forbid construction that does not account for the externalities imposed by its water and energy usage.
> And secondly, from what I gather, closed-loop sites require an order of magnitude more power than open-loop to run.
Are you suggesting that removing x kilowatts of input takes at least 10x killowatts?
Or are you suggesting they spend 10x more energy on the cooling than an open-loop system?
The latter might well be true - an open-loop system is after all trading water for energy in a very extreme way - if you have a water source with pressure the simplest water cooling system "just" routes water over radiators. In practice you'll want a bit more than that for most setups, but it can be very cheap if you can ignore the volume of water used.
That is still a regulatory issue. You can decide which resources are critical to you in a given location, and you restrict or allow different approaches accordingly, or require funding or licensing to suit.
> That's still going to have a large impact on local resources, especially as around 2/3 of power plants supplying data centers are also ocated in water-stressed regions
Still entirely a question of regulating externalities.
Not all power generation requires significant water use. Your government is free to e.g. require new data centre capacity to be accompanied by an according buildup of generating capacity with according restrictions on water use.
If that means data centres moves elsewhere, then so be it. That is part of the goal if you argue for pricing in and regulating externalities:
Ensure that the cost of operating in a way that doesn't negatively impact the community is priced in so that decisions are taken based on the actual full cost to society.
So to go full loop to my original comment (sorry): It's entirely a question of whether or not you want to allow it.
This is what governments are for.
That matters when considering what to regulate. A lot of people pushing for regulation are pushing for blocking data centres instead of regulating the externalities they claim is their issue.