More than 500 localities have restricted new data center construction over water, electricity and cost fears. A look at the numbers behind those concerns finds most of them don’t hold up.
New York pauses new AI data centers over power and water concerns
A pause on new AI data centers in New York brings it to the forefront of a national debate over how to manage data center infrastructure.
Data centers, the gigantic buildings that house the computing power behind the artificial intelligence boom, are wildly unpopular. A recent Gallup poll found that 7 in 10 Americans oppose one being built in their area.
Most of those objections don’t hold up. In town after town, data centers have delivered real benefits to the communities willing to host them. Local officials should be welcoming these projects, not passing laws to keep them out.
Quincy, Washington, is now home to more than two dozen data centers, which pay more than half the city’s property taxes. That windfall has bought Quincy a new high school, sports complex, hospital, library, police station, fire department and even a water park. A population of 8,500 people got all of that, plus 900 new jobs. Its poverty rate has fallen from nearly 30% in 2012 to 6.2% in 2024.
Quincy is the high end of outcomes, and it got in ahead of the curve, but data centers bring jobs and tax revenue to any city willing to host them.
An increase in tax revenue let Richland Parish, Louisiana, pay its teachers $50,000 bonuses. Loudoun County, Virginia, now known as the data center capital of the world, has used the money to cut property tax rates.
Data centers are projected to generate $27 billion in tax revenue nationwide over the next decade, and more local governments should be looking at how to claim their share. They also need engineers and electricians to maintain them and construction crews to build them. Salaries for construction workers on these projects have ballooned into six figures amid the “gold rush.”
AI data center backlash misunderstands water, electricity concerns
Companies flocked to Quincy for its cheap land, cheap power and easy permitting. Yet more and more local governments are moving the other way. More than 500 localities have restricted the construction of new data centers.
New York became the first state to pass a moratorium on the projects, and 14 more states have considered similar measures. Sen. Bernie Sanders, I-Vermont, and Rep. Alexandria Ocasio-Cortez, D-New York, have introduced a nationwide version.
Misguided as they are, politicians on both sides of the aisle are just responding to their constituents. A recent Gallup poll found that half of opponents are against data centers over their effect on the local environment, meaning water usage or energy consumption. Many of those concerns are misplaced or overstated.
Water is the most misunderstood one. Data centers do use it to cool their servers, and quite a bit of it, but not all cooling is equal. Evaporative cooling, the older method, consumes water by evaporating it to pull heat out of the system. Closed-loop systems recirculate the same water over and over instead.
Right now, 56% of data centers still use evaporative cooling, but many of the industry’s biggest players are moving to closed-loop systems.
U.S. data centers account for just 0.14% of the country’s annual water consumption, or 449 million gallons a day. For reference, California almond farms use 4.2 billion gallons a day. Golf courses use 1.4 billion.
Electricity is a tougher case. Data centers already account for roughly 4% of American electricity use, and that figure could hit 12% by 2028.
Americans are understandably worried about electricity costs, which data centers can push up under some circumstances, mainly when they’re built in areas without the grid capacity to support them. But those increases don’t have to be permanent. Data centers add demand in a stable, predictable way, giving power companies time to plan new production and infrastructure to meet it.
The real gripe shouldn’t be with data centers, but with the regulations that make it so hard to build energy infrastructure in the first place. Regions with surplus power, such as North Dakota, have actually seen electricity prices fall slightly even as demand rose almost 40%, largely because of data centers. Some states with the biggest demand increases have generally seen some of the smallest price increases.
States with policy constraints, like New York, have made it needlessly hard to build energy infrastructure, a problem that predates data centers entirely. Others, like California, face their own obstacles, from wildfire risk to a permitting process that can take years.
Americans shouldn’t be looking for ways to restrict these projects. They should be looking for ways to make it easier to build the infrastructure that powers them. Transmission itself is relatively cheap. It’s the infrastructure around it that drives up local costs. Anyone worried about price increases should take that up with their local government, not with the data centers themselves.
Dace Potas, a law student, is an opinion columnist for USA TODAY. Follow him on X: @DacePotas