Data centers have become essential national infrastructure powering everything from banking systems to healthcare, government services, and platforms like ChatGPT and Facebook. Yet public discourse and the Not In My Back Yard (NIMBY) movement increasingly frame them as environmental liabilities.
That sentiment is now shaping public policy. New York has approved a one-year pause on permits for new large-scale data centers while officials review their impact. Meanwhile, Virginia (home to the world’s largest concentration of data centers) has become the first US state to introduce an electricity consumption tax on data centers.
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The truth is: life as we know it would be on pause if it were not for our country’s data centers. Our digital consumption, our appetite for new AI services, and the speed and scale at which we demand them, is driving the expansion of this infrastructure and drawing them closer to our homes. It’s pushing infrastructure into smaller communities, resulting in power and water demand spreading into regions that never expected to host this kind of industrial infrastructure.
Research from the International Data Center Authority’s Global Digital Economy Report (2026) found that the digital economy is predicted to soon account for 30% of global GDP. Indeed, without AI and data centers, the US economy barely grew at all in the first half of last year, and it’s now the leading driver of growth in private investment in the US.
Today, a data center’s use of electricity and water has become the major, and possibly most contentious, issue. But this framing misses the core issue: not whether data centers use water or electricity, but whether the industry has failed to communicate effectively, engage communities early, and properly contextualize trade-offs.
The reality is that data centers used to consume vast amounts of water. Traditional facilities that relied on older, less efficient cooling techniques evaporated millions of gallons of water a day for cooling. But as the technology has continued to develop in sophistication, driven by the billions invested annually, next-generation facilities rely on modern, less intensive cooling processes — such as direct-to-chip closed-loop liquid cooling (which acts much like a car radiator). Once this closed loop is filled once, the data center will consume minimal water daily.
The global water footprint of data centers is also remarkably small compared to other sectors. Per square foot, modern data centers consume significantly less water than standard commercial buildings like hospitals or courthouses, and vastly less than the forest products industry requires just to manufacture toilet paper. Some stats suggest data centers nationally use less water than golf courses…
The reduction in the environmental impact of data centers will only continue as the technology advances, especially as AI and automation stimulate efficiencies and reduce our footprint in other markets and industries. In California, waste heat created as a by-product by local data centers is even being used to provide heating and hot water to residents’ apartment buildings.
A lack of visibility seems to be an ongoing driver of local community pushback. Data center developers undertake rigorous site-selection processes that not only consider water availability, but also energy, availability of a trained workforce (human capital), proximity to the end-user and avoidance of hazards such as floods or storms. When a site is identified by a developer, they simply cannot go public about it until the land is under contract, to ensure their competitive edge. This may present itself as a lack of transparency, but in reality is purely the nature of business and a signal of fierce competition.
It’s easy to blame data center developers for meeting demand, but the acceleration of this is underlying a more serious problem — that our infrastructure is rusted. We have neglected investment for so long that our energy grid is under immense stress and our infrastructure across roads and transport, water, and even education is suffering — we cannot meet the needs of today’s society. Data centers, driven by the growing AI demand, are just forcing us to realize this much faster than anticipated.
New York’s moratorium adds to the billions of dollars in data center projects that have so far been blocked or delayed across the US amid local opposition, $156 billion in 2025 alone, as they become flashpoints of community activism.
From every business that uses an AI agent to handle customer calls, every hospital that uses treatments made possible by AI, to every person who uses an AI co-pilot to help them draft an email, we must all recognize that data centers provide the computing capability that makes this possible.
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Whether we believe that our societies are ready for this scale of Artificial Intelligence deserves its own in-depth evaluation, but the fact of the matter is that we are the ones drawing data centers closer and closer by our ever-growing use of Facebook, WhatsApp, Netflix, online banking, Google Maps, ChatGPT, and beyond.
So for now, I’ll leave you with this: if Not In My Back Yard, then where?
Mehdi Paryavi is the CEO and founder of the International Data Center Authority (IDCA), the world’s leading Digital Economy think tank.
