As artificial intelligence grows, technology companies are building larger data centers across the United States to provide the computing power needed for AI systems. These projects can bring billions of dollars in investment, construction work, and new infrastructure. At the same time, their demand for electricity, water, and land has raised questions about how the economic benefits and environmental costs are divided.
These concerns have recently led states to introduce new policies. On September 15, New York proposed that developers provide local communities with investments worth at least $1 million for every megawatt of electricity demand from a new data center. A megawatt is a measurement of power, and large data centers can require hundreds of megawatts. New York officials said the proposal is intended to provide communities with more direct benefits from these projects.
Virginia, which has the highest concentration of data centers in the world, announced a Data Center Accountability Framework on September 18. The plan addresses electricity costs, water use, pollution, noise, land use, and transparency around new projects. Some measures can be carried out by the state government, while others will require approval from lawmakers.
Data centers are buildings filled with computer servers that store and process information. AI systems require especially large amounts of computing power, which also requires electricity. Lawrence Berkeley National Laboratory estimated that U.S. data centers consumed about 4.7 percent of the country’s electricity in 2024. Under one projection, that share could increase to about 11.8 percent by 2030, although researchers emphasized that future demand remains uncertain.
For some communities, data-center expansion can bring major economic benefits. Meta, for example, is expanding an AI data center in Richland Parish, Louisiana, where the company says it plans to invest more than $50 billion. Meta estimates that construction could support more than 7,500 workers at its peak, while the completed facility would support about 1,000 operational jobs. The company has also announced investments in roads, water systems, and workforce training.
However, data centers can also require major investments in electricity infrastructure. Servers operate continuously and produce heat, requiring additional energy for cooling. New facilities may require power plants, transmission lines, and other infrastructure. Virginia’s new framework includes measures intended to prevent infrastructure costs created specifically by data centers from being passed on to other electricity customers.
Water is another concern because some data centers use it to cool their equipment. The amount varies depending on the facility’s design, cooling technology, and local climate. As a result, the effect on local water supplies can differ greatly between data centers.
Air pollution has also raised concerns where facilities use natural-gas turbines or diesel generators. In Memphis, Tennessee, xAI’s Colossus supercomputer facility has faced opposition over its use of natural-gas turbines. The facility is near Boxtown and other historically Black communities that have already experienced industrial pollution. Environmental groups argue that additional emissions could increase the pollution burden on nearby residents. xAI has defended its operations and pointed to investments in local infrastructure, including an electric substation and water-recycling facility.
The Memphis dispute shows why data centers have become an environmental justice issue. Not every data center is located in a disadvantaged community or creates the same effects. Instead, researchers and community groups are examining whether communities already experiencing pollution or economic disadvantage may carry additional environmental burdens while economic benefits are distributed elsewhere.
Governments and companies are responding in different ways. New York has temporarily restricted certain new data-center projects while studying their effects on electricity, water, air quality, noise, and disadvantaged communities. Virginia’s new framework calls for greater transparency and stronger protections involving energy, water, pollution, and local communities. Technology companies have also announced investments in renewable energy, efficient cooling, water recycling, and local infrastructure.
As AI infrastructure expands, the effects of data centers will depend on where they are built, how they receive electricity and water, and their agreements with surrounding communities. The projects can bring investment, jobs, and tax revenue while increasing demand for electricity, water, land, and infrastructure. Recent actions in New York and Virginia, along with disputes in communities such as Memphis, show growing attention to how these benefits and costs are distributed.
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