Artificial Intelligence and the development of Data Centers are changing the global economy, impacting every sector, from healthcare to manufacturing to education. Pennsylvania has stood out nationally as a highly competitive destination for AI and data center investments, with $90 billion in AI investments from companies such as Google and Amazon, resulting in a significant expansion of physical data center locations. AI and data centers do provide significant economic innovation; however, this is not without risk. AI and data center investment present opportunities, but also substantial challenges that communities and small businesses must handle with care.
Investments in AI and data centers do have economic benefits. Large-scale data centers, seen in Pennsylvania, generate significant upfront construction spending and long-term tax revenue, as well as upgrades to existing infrastructure, such as improving roads and fiber-optic networks. For example, in Loudoun County, Virginia, a new data center contributes $900 million in local tax revenue. While AI sounds solely robotic, it also requires people and provides new employment opportunities for skilled trades workers and tech workers. It's estimated that the United States will need 500,000 new electricians and other skilled workers to keep up with current demands stemming from energy consumption, and data center upstart and maintenance.
While AI and Data centers offer many economic and efficiency benefits, they also raise significant environmental concerns. AI data centers consume incredible amounts of water and electricity. Some of these data centers have used as much power as 100,000 homes. As for water usage, the required cooling water is consumed at a rate of millions of gallons a day. Data centers also affect communities, triggering the NIMBY effect due to noise from diesel generators. There is also the issue of transforming farm and forest land into open space for these data centers. As for the price for locals living near data centers, as they require an extensive use of utilities, the cost of the necessary infrastructure upgrades oftentimes will fall on ratepayers across the entire region, which increases personal electricity rates anywhere from 8%-25% percent for areas with many data centers, the people feeling the highest price are households and small businesses, already struggling with increasing utility bills.
As for small businesses, AI could become a mixed bag. AI does have an equalizing effect; it has enabled small businesses to automate some tasks, improve customer service, and manage organizational operations. Data center development also provides contracting opportunities in landscaping, engineering, hospitality, and maintenance industries, or has developers work with trade schools to create pipelines for technical careers.
However, rising electricity costs could eventually disproportionately impact small businesses that already operate on thin margins compared to large corporations. Large corporations will also offer premium wages for electricians, HVAC technicians, and maintenance workers that small businesses cannot match. Upgrading infrastructure may shut down roadways, and other disruptions are likely to occur during construction. As for environmental concerns, data centers' large space requirements may affect the look, feel, and sound of neighborhoods and cities, with economic consequences.
As for local communities, while data centers can bring revenue and upgraded infrastructure during initial economic growth from construction, they may also lead to land-use changes, air quality concerns, and strain on water and energy resources. Even with initial financial success, long-term sustainability is not a promise. Communities that rely on the initial tax revenue may encounter long–term budget shortfalls if AI companies scale back, automate, or relocate. Transparency is also becoming an increasing issue, as AI companies require non-disclosure agreements that prevent the public from accessing information on water/electricity usage and environmental impact. This leaves the public without transparency into the issues and long-term consequences that may arise if they allow data centers in their spaces.
As AI and data centers are clearly the future, whether we like it or not, there is a way to balance competing interests. Local governments may hold the power to negotiate data center agreements that align with community needs. Selecting site locations in industrialized zones with stable grid capacity and water resources that reduce the burden on communities may lead to less controversial, more sustainable development. While AI does have environmental burdens, using closed-loop cooling systems with water replenishment plans can help offset some of the environmental stressors. Transparent reporting requirements and a commitment to renewables will greatly benefit communities by enabling them to assess their own pros and cons and weigh them accordingly. For small businesses, chambers of commerce organizations can play a key role by pushing for utility protections, local procurement opportunities, targeted training programs, and AI tools and education.
AI data centers are already a promise in Pennsylvania, and engaging communities in this transition can make stakeholders feel valued and involved in shaping the future of AI and the digital economy. This moment in time is an opportunity for thoughtful integration and innovation that will provide workforce development and small-business opportunities. It is critical to have strategic planning, community engagement, and feedback to ensure the future success and sustainability of AI and the digital economy, and to ensure that small businesses have the tools to succeed.