NIMBY’s New Target: Socioeconomic and Environmental Characteristics of Neighborhoods Near U.S. Data Centers
This study analyzes the socioeconomic and environmental characteristics of neighborhoods hosting U.S. data centers across ten states, revealing that these areas tend to be wealthier, more educated, and more diverse than state averages, while also examining the facilities' impacts on utility rates, water resources, disaster exposure, and housing prices.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the modern world, vast amounts of information are stored not in filing cabinets or libraries, but in massive, windowless warehouses filled with humming servers. These are data centers, the physical engines behind the cloud, streaming video, and artificial intelligence. They require immense amounts of electricity to run and significant quantities of water to keep their machinery from overheating. Because they are so large and demanding, they often spark local resistance. People worry that these facilities will drive up their electricity bills, strain local water supplies, or lower the value of their homes. This fear, often summarized by the phrase "not in my backyard," has led to protests and legal battles in communities across the United States. But a lingering question remains: who actually lives near these facilities? Are they placed in poor, marginalized neighborhoods, as has historically been the case with other industrial sites, or do they sit in wealthier areas? And do they truly cause the environmental and economic harm that residents fear?
A team of researchers set out to answer these questions by examining the neighborhoods surrounding data centers in ten states with the highest concentration of these facilities: Arizona, California, Illinois, Iowa, New Jersey, Ohio, Oregon, Texas, Virginia, and Washington. Instead of relying on anecdotes or isolated incidents, the team mapped over a thousand data center locations and compared the people living within five kilometers of them to the people living elsewhere in the same states. They looked at income levels, education, race, and ethnicity, as well as the risk of natural disasters like floods and wildfires. They also analyzed utility bills to see if residents near data centers were paying more for power, and they examined water sources to understand the stress on local supplies. Finally, they tracked housing prices to see if the presence of a data center caused property values to drop.
The findings challenge the common assumption that data centers are being built in low-income, minority communities. In most of the states studied, the neighborhoods near data centers were actually wealthier and more educated than the rest of the state. Residents in these areas tended to have higher household incomes and were more likely to hold college degrees. However, these wealthier areas also had larger shares of racial and ethnic minority populations compared to the state average. This pattern suggests that data centers are often located in or near major metropolitan areas, which naturally contain more diverse and affluent populations. The researchers noted that this demographic profile was not a new development; in states where they looked at historical data, these socioeconomic differences existed long before the recent surge in data center construction. The facilities are simply following the infrastructure they need—high-speed internet and reliable power—which is already concentrated in these urban and suburban hubs.
When it came to the environment and the wallet, the picture was more complex. The researchers found that in several states, the gap between what residential customers pay for electricity and what industrial customers pay has widened significantly since 2020. In states like California, Illinois, and New Jersey, this gap grew so large that a typical household could be paying an extra fifty to sixty dollars a month compared to what they would pay if the rates were more balanced. While the study could not prove that data centers directly caused this price hike, the timing and the location of the utilities serving these facilities suggest a strong link. On the water front, the situation varied by geography. In arid states like Arizona and California, data centers are located in watersheds that already face high water stress. These areas rely heavily on groundwater, and the presence of data centers adds to the demand in regions where water is already scarce. In other states, the water stress was lower, but the concentration of public water use in these specific areas was still notable.
The fear that data centers would destroy local property values also did not hold up under scrutiny. The researchers tracked home prices in neighborhoods with data centers against similar neighborhoods nearby and found no evidence of a decline. In fact, in most places, home values in data center neighborhoods grew at the same rate as, or even faster than, the surrounding areas. In the one state where a difference was found, homes near data centers appreciated more slowly, but they still increased in value; they did not lose money. This aligns with the finding that these neighborhoods are generally affluent and desirable. The study also looked at natural disaster risks. Surprisingly, data center locations tended to be in areas with lower risks of wildfires, floods, and tornadoes compared to the rest of the state, likely because they are built in developed areas that have historically avoided the most hazardous zones. The one exception was heat waves; data center areas were more likely to experience extreme heat, a result of the "urban heat island" effect where cities are naturally hotter than rural areas.
Ultimately, the study paints a nuanced picture that defies simple stereotypes. Data centers are not hiding in the poorest corners of the country; they are clustering in the most developed, diverse, and often wealthier parts of the nation. While this might seem to contradict the history of environmental injustice, it does not mean the concerns of local residents are unfounded. The potential for rising electricity bills and the strain on water resources in already stressed regions are real issues. The resistance to these facilities is growing, even in affluent communities, driven by genuine worries about the cost of living and the health of the local environment. As artificial intelligence and digital storage continue to expand, the demand for these massive facilities will only increase, making the balance between technological progress and community well-being a critical challenge for the future.
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