> 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