From The Ripon Forum

April 2026

https://riponsociety.org/article/the-triple-challenge-facing-data-centers-and-the-communities-where-they-are-built/

The Triple Challenge Facing Data Centers and the Communities Where They are Built

by George McCarthy

We live in the age of artificial intelligence, and the defining infrastructure of this age is the data center. These server-packed facilities are the physical backbone not only of AI, but of cloud computing and the digital economy, as well. They are also being built at a once-in-a-century pace.

For host communities, this buildout presents a genuine opportunity in terms of increased tax revenues, new construction jobs, and a seat at the center of the technological economy. But it also raises urgent questions about three interconnected resources — energy, water, and land — that policymakers can no longer afford to ignore.

Energy: The Grid Under Pressure
A single large data center can consume as much electricity as a small city. AI workloads drive even greater demand than conventional cloud computing. The International Energy Agency projected in 2025 that global data center electricity consumption could double by 2030 — growth already straining U.S. transmission infrastructure and forcing utilities to rewrite long-term capacity plans.

The International Energy Agency projected in 2025 that global data center electricity consumption could double by 2030.

The critical question for communities is not just whether the grid can handle the load, but who pays when it can't. When infrastructure upgrades required to serve a data center get absorbed into the general utility rate base, residential customers end up subsidizing industrial-scale digital infrastructure with nothing to show for it. Getting cost allocation right — through impact fees, negotiated utility agreements, and transparent permitting conditions — is basic fiscal stewardship. Done well, data centers can be genuine partners in the clean energy transition, co-locating renewable generation and battery storage that strengthens regional grids rather than simply straining them.

Water: A Resource Requiring Careful Planning
Water is a less-discussed dimension of data center resource use, but it demands equal attention. Evaporative cooling systems consume significant quantities, and demand grows as facilities scale up for AI workloads. Loudoun County, Virginia — home to roughly 200 data centers — consumed nearly 900 million gallons of water in 2023, a 63 percent increase from 2019. That figure reflects the world's most concentrated data center market, but it illustrates the planning questions any community should be asking before approving the next facility.

Some good news is that the industry is investing in more water-efficient technologies, and several major technology companies have made voluntary commitments to water neutrality or positivity — pledging to return more to local watersheds than their facilities consume. Communities that engage early and ask the right questions can secure meaningful water stewardship commitments as a condition of approval, not an afterthought.

Loudoun County, Virginia — home to roughly 200 data centers — consumed nearly 900 million gallons of water in 2023, a 63 percent increase from 2019.

Land: The Footprint Nobody's Talking About
The land requirements of data centers are mostly unexamined. For communities managing long-term growth, this may be their most consequential challenge. Data centers occupy campus-scale footprints, typically at the edges of existing communities where land is cheaper and available. Siting choices shape surrounding land use, affect property values, and generate new infrastructure demands — such as road access and utility corridors — while producing relatively few permanent post-construction jobs.

There are longer-term risks worth planning for. Facilities that look cutting-edge today may be obsolete within a decade. Communities should negotiate decommissioning funds, bonds, or escrow requirements up front — before approval, not after abandonment — to guard against stranded costs and shuttered campuses.

Turning Challenges Into Community Benefits
The convergence of these three challenges is also an opportunity. Communities that understand what they are offering have real leverage — and they should use it.

Community benefit agreements are among the most powerful tools available. These legally binding commitments ensure that a data center project delivers tangible value beyond its fiscal footprint. On energy: renewable co-location, or at minimum, rate protection for residents. On water: funding for watershed restoration or system upgrades. On land: open space preservation, road improvements, or contributions to affordable housing.

Beyond resource commitments, these agreements can address school funding, broadband expansion, job training, and local business support. They are a genuine community dividend in exchange for hosting critical national infrastructure.

The key is preparation. Communities that understand the energy, water, and land implications of a proposed project before an application is filed hold a fundamentally stronger negotiating position. To help, the Lincoln Institute will publish a comprehensive policy guide on data center siting this summer, giving communities the frameworks, fiscal tools, and policy options they need.

The Opportunity in Front of Us
The data center buildout is one of the most significant waves of infrastructure investment in American history. It creates real economic value and accelerates technological capabilities that benefit everyone. The question is not whether it should happen, but whether the communities making it possible — contributing their land, energy, water, and civic infrastructure — share equitably in its benefits.

Energy, water, and land: each represents something a community gives when it hosts a data center. Each deserves to be accounted for honestly, managed responsibly, and compensated fairly. The tools exist. The will to use them is growing. Communities that engage with clear eyes and strong preparation will be the ones who can say, years from now, that the digital revolution worked for them — not through them.

Dr. George “Mac” McCarthy is president and CEO of the Lincoln Institute of Land Policy in Cambridge, Massachusetts.

The Ripon Forum is published six times a year by The Ripon Society, a public policy organization that was founded in 1962 and takes its name from the town where the Republican Party was born in 1854 –Ripon, Wisconsin. One of the main goals of The Ripon Society is to promote the ideas and principles that have made America great and contributed to the GOP’s success. These ideas include keeping our nation secure, keeping taxes low and having a federal government that is smaller, smarter and more accountable to the people.

SOURCE: https://riponsociety.org/article/the-triple-challenge-facing-data-centers-and-the-communities-where-they-are-built/