Op-ed views and opinions expressed are solely those of the author.
Across the country, data centers have become a flashpoint in local politics. Residents have questions about usage of land, water, electricity, as well as noise and the cost of proposed tax incentives. Those questions are fair, and communities should never be asked to approve major infrastructure blindly. But as a finance professor, I would suggest that much of the current debate suffers from a basic analytical flaw: it examines only one half of the balance sheet.
Every investment has costs. The serious question is whether the assets exceed the liabilities. In the case of data centers, the answer is often yes. When communities weigh these projects objectively, they frequently find that the economic benefits are substantial, the feared impacts are manageable, and the long-term upside is too important to dismiss.
That is especially true as President Trump works to position the United States for what he has described as a new era of American technological leadership. America cannot lead the AI economy while treating AI infrastructure as something to be feared, but this is where the debate, unfortunately, too often loses perspective. Opponents focus on the potential costs a data center may impose, but not the value it may create.
At the national level, the data center industry has already become a major contributor to American prosperity. A recent PwC report found that the U.S. data center industry contributed nearly $927 billion to GDP in 2024 and supported 5.5 million jobs. This makes it a core component of the modern economy.
Yet at a local level, the benefits are often even more tangible because they are felt directly by the families and communities where these facilities operate. Data centers bring in private investment that creates construction jobs and support skilled trades. They generate hundreds of billions in tax revenue that can fund schools, roads, and public safety.
State and local tax revenues attributable to data centers in Ohio, for example, grew from approximately $431 million in 2017 to roughly $1 billion in 2024. Over that period, the industry generated more than $5 billion in cumulative state and local tax revenue. For homeowners facing rising property tax bills and communities struggling to fund infrastructure improvements, those revenues matter. Every dollar generated by new commercial investment is a dollar that does not have to come from existing residents. Stronger commercial tax bases can help local governments improve services while reducing pressure for future tax increases.
Contrary to many popular assumptions, data centers can sometimes help reduce utility costs for ordinary consumers rather than increase them as well.
Recent analysis from Lawrence Berkeley National Laboratory, for example, found that under the right regulatory framework, data centers can reduce electricity costs for residential ratepayers rather than increase it. North Dakota, for example, which experienced roughly a 40 percent increase in electricity demand associated with new data center development, saw average electricity prices decline by approximately three cents per kilowatt-hour. Virginia, home to the world’s largest concentration of data centers, experienced a 14 percent increase in electricity demand while average prices fell by roughly one cent per kilowatt-hour.
Many residents similarly worry that water consumption at large data centers will strain local supplies and increase household water bills. However, this an area where the public debate often gets ahead of the facts. Modern cooling technologies have helped reduce data center water usage to a point that is not significant enough to materially affect costs for other consumers. Yet public perceptions continue to be shaped by some of the most dramatic claims rather than the most accurate ones.
One widely circulated false claim involved a proposed Google data center in Chile, which provides a useful illustration of this point. Initial reports incorrectly indicated that the facility would require more than one thousand times the amount of water consumed by the local population, eliciting significant concern. It was later reported that the comparison was based on a unit-conversion error that overstated the figure by a factor of 1,000, but the misstated statistic is still cited today. This serves as a reminder that communities deserve careful analysis rather than alarming headlines.
Viewed through a financial lens, the national and local balance sheet for data centers often looks very different from the one portrayed by opponents. None of this means every data center proposal deserves automatic approval. Communities should ask tough questions. Companies should be transparent. Regulators should ensure that local interests are protected. But a complete analysis requires examining both sides of the ledger.
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