Why better-off cities and towns see more benefits from data centers than rural regions
Communities are increasingly opposing data center development, prompting political action such as Maine's recent veto of a statewide moratorium bill. Research indicates that data centers boost growth and jobs primarily in urban, economically developed areas, with negligible effects in rural regions. The study also found a 5% increase in local electricity prices after a data center becomes operational.
The ongoing backlash against data center development is intensifying across the United States, marked by over 1,200 public actions including zoning disputes and moratoriums since early 2024. Key concerns often revolve around grid capacity, water usage, and transparency in siting. This pushback has spurred legislative efforts, notably in Maine, where lawmakers passed a bill for the nation's first statewide moratorium on new data centers. However, Governor Janet Mills vetoed the measure, citing concerns about its impact on a proposed $550 million conversion of the Androscoggin Mill in Jay into a data center.
Despite the veto, Governor Mills acknowledged the political climate by signing separate legislation that prevents state tax incentives from being allocated to data centers and committed to forming a council to study the industry statewide. This incident highlights how local cases can influence broader state-level policy decisions regarding data center expansion, with up to ten other states reportedly considering similar measures.
Academics studying the economic impact of data centers found that while they can boost growth and jobs, these benefits are most significant in urban, developed economies with existing labor and capital clusters. Metropolitan counties saw substantial increases in employment (4.1%) and wages (5.5%), whereas less populous counties experienced negligible job and wage spillovers. The study also indicated that retail electricity prices rose by approximately 5% after a data center became operational in localized utility service areas, though this figure is subject to various influencing factors.
These findings are intended to provide policymakers with clearer evidence to navigate the complex and often emotional debate surrounding data center development. They suggest that the economic context of the host community, alongside the specifics of subsidy design and infrastructure upgrades, plays a crucial role in determining whether a data center project truly benefits all residents.