> Make them pay more for their water and they'll magically discover closed cycle cooling.

A closed cycle cooling system doesn't solve the overall problem of water usage. Yes you have a cycle within the datacenter, but you need to then move that energy somewhere else, out of the system. Eventually that energy needs to find its way in the environment. A close loop system for a datacenter reduces the water use on site, but actually increase electro use. If that electricity comes from a power plant that is cooled by water you just moved the problem upstream

That's true. Making them pay enough for water might mean the data center doesn't even get built there. It gets built somewhere more logical with abundant cheap water.