Assessing data center policy design and impacts

Session Submission Type: Panel

Abstract

Data centers have rapidly emerged as critical infrastructure underpinning the digital economy, fueled by the expansion of cloud computing, artificial intelligence, and data-intensive services. As the physical backbone of digital and internet services, they support a wide range of economic activities—from enterprise operations and e-commerce to public services and scientific research. Their growth has generated substantial economic benefits, including large-scale capital investment, job creation, tax revenues, and workforce development opportunities in host communities. At the same time, data centers introduce complex and often contested policy challenges. These include rapidly rising energy demand, significant water consumption for cooling, and associated carbon emissions, as well as local fiscal implications, land use pressures, infrastructure strain, and concerns from nearby communities about noise, aesthetics, and environmental impacts. Across the United States and globally, policymakers are increasingly grappling with navigating these trade-offs and striking a balance between economic development objectives and the environmental and social sustainability of data center expansion.

This panel brings together four papers from across the United States and the globe that examine data centers through complementary analytical lenses. Collectively, the papers investigate how governments design and deploy policy tools to attract and regulate data centers, how these policies shape the geographic distribution and environmental footprint of data center development, and how data centers, in turn, affect local economies and communities.The study by Siddiki and colleagues offers a comprehensive mapping of state-level policy design on data centers, highlighting substantial variation in policy design and documenting an evolving policy landscape that is gradually shifting from growth-oriented incentives toward more conditional and regulatory approaches. Burley and colleagues examine how policy environments interact with data center development and environmental permitting processes, providing new empirical evidence on how policy design influences the siting and expansion of data centers. Ross and colleague focus on fiscal impacts, estimating how hyperscale data centers affect local government revenues and expenditures, thereby shedding light on their net fiscal contributions. Finally, Chia and colleagues analyze spatial and economic outcomes, demonstrating how data center siting influences nearby housing markets and broader indicators of local welfare.

Together, these studies provide a timely, policy-relevant, and multi-dimensional understanding of a rapidly evolving domain. By bringing together scholars at different career stages and from diverse geographic contexts, the panel fosters a rich and comparative dialogue on the governance of digital infrastructure in an era of accelerating technological change.

Policy Area

• Natural Resource, Energy, and Environmental Policy

Chair

• Shan Zhou, Purdue University

Discussants

• Gabriel Chan, University of Minnesota

• David Konisky, Indiana University

Individual Presentations

• Assessing Data Center Policy Design: An Analysis of Variation across US States - Presenting Author: Saba Siddiki, Syracuse University; Non-Presenting Co-Author: Fengxiu Zhang, George Mason University; Non-Presenting Co-Author: Ryan Westwood, Syracuse University; Non-Presenting Co-Author: Elan Quinn Kyser, Syracuse University; Non-Presenting Co-Author: Tanzia Amreen Haq, George Mason University; Non-Presenting Co-Author: Shuping Wang, University of Illinois, Chicago; Non-Presenting Co-Author: Jie Xu, George Mason University

• From Development to Regulation: How Data Center Development Shapes U.S. State Policy - Presenting Author: Yuetong Zhang, University of North Carolina at Chapel Hill; Non-Presenting Co-Author: Katherine Burley Farr, University of North Carolina at Chapel Hill; Non-Presenting Co-Author: ANGEL HSU, University of North Carolina at Chapel Hill

• The Effect of Hyperscale Data Centers on Local Tax Revenues - Presenting Author: Justin Ross, Indiana University; Non-Presenting Co-Author: Jiahe Zheng, Indiana University

• The Spatial Incidence of Hyperscale Data Centers - Non-Presenting Co-Author: Liu Ee Chia, National University of Singapore; Presenting Author: Siyuan Hu, University of Wisconsin-Madison

Organizer

• Fengxiu Zhang, George Mason University