Colorado considers data center incentives amidst severe drought

Colorado considers data center incentives amidst severe drought

News ClipThe Colorado Sun·CO·5/3/2026

Colorado is facing its worst recorded snowpack and severe drought, leading to critical water shortages. Amidst this crisis, the state legislature is debating tax incentives to attract water and electricity-intensive data centers. Farmers express deep concern about the potential impact on already scarce water resources.

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Gov: Colorado State Legislature
Colorado is experiencing an unprecedented water crisis, with statewide snowpack at a record low 19% of the historical median, threatening to bring the Colorado River to a trickle. This severe drought is forcing drastic measures to prevent Lake Powell from reaching 'dead pool' and has downstream states like Arizona and California lobbying for renegotiation of the Colorado River Compact. Neil Guard, a farmer in Mesa County, whose farm is located between Palisade and Clifton, highlights the critical situation, stating that the river is low enough to walk across. His farm, which grows peaches and grapes, relies heavily on irrigation, which is now uncertain. Meanwhile, the Colorado State Legislature is considering a proposal for tax incentives to attract data centers, which are projected to consume up to 5 million gallons of water daily, to the state. Another bill aims to regulate data centers' water and electricity consumption. The author of the article, Carman, criticizes the timing and logic of offering tax incentives to a water-intensive industry during such a severe drought. Farmers like Guard are worried they may not have enough water to sustain their crops through the winter, potentially leading to devastating losses for agricultural operations already struggling in the region.