Oklahoma communities are considering data centers projects mainly to bring in revenue but Oklahoma State University economists say the economic impact on local areas is uncertain.
There are about 49 data centers existing, active or under construction in the state, according to the American Farm Bureau Federation. The facilities are new to Oklahoma and what they can do for local communities, economists say, largely depend on what is negotiated.
Currently, there is little state-specific long-term data because there is only one large data center in Oklahoma that's been around for a long time – a Google center in Pryor.
Mckenzie Boyce, OSU professor of rural and community development, is one of the authors of the OSU extension's new factsheet, "The Economics of Data Centers: Considerations for Communities."
As data center projects are making headlines, there has been public pushback and questions. To help answer community questions, Boyce is part of the extension arm looking at economic impacts while researchers are studying other considerations including environmental effects.
"We've started to explore some of the different ways that communities may benefit from data centers in order to provide more information to communities evaluating some of these different economic considerations for them to make a decision," Boyce said.
A case-by-case basis
For the factsheet, she said researchers looked at other states for more information about the continuous impact of data centers.
"Obviously, data centers have the potential, emphasis on 'potential,' to generate a lot of revenue, as well as some employment growth and potentially wage growth for communities. But it's going to be specific on the project, a lot of the specific negotiations," Boyce said.
Brian Whitacare, rural economic development extension specialist, said local government revenues come in the form of sales taxes, property taxes, payment in lieu of taxes, utility franchise fees or other payments that could go toward school systems, parks and roads. In Stillwater, for example, there are community betterment payments.
"You know, you think about it, for a lot of rural communities that have really been struggling to improve their school systems or attract people, these are helpful payments," Whitacre said.
But not all projects are exactly alike. Boyce said there is evidence of Stillwater's data center construction leading to more sales tax revenue, but there wasn't a bump in sales tax during Muskogee's cryptocurrency mining facility construction.
The Muskogee data center was smaller and completed in a shorter timeframe, leading to fewer tax dollars, she said.
"I think just the needs of the project were much different in terms of the construction materials and workforce needed in Muskogee compared to Stillwater," Boyce said.
Community considerations
As far as employment, the economists turned to Texas because it has seen growth data centers over the last several years. Overall, they didn't find a large employment effect but there was an initial uptick in construction employment.
This, she said, could be a plus or minus for communities. Some cities don't have the infrastructure to support an influx of new workers, while others do.
Large scale data centers have big water and energy demands, which can increase electricity and water costs, or require more public investment, according to the fact sheet.
"Local governments should ensure that data center developers bear the full cost of any necessary infrastructure upgrades upfront to reduce the likelihood that existing residents and businesses are burdened with higher utility rates or taxes," the fact sheet reads.
The economists also note communities should consider how the investments can also meet existing community infrastructure needs.
Whitacre said people who own land or a home near a facility will probably face a loss in property value. He said this is seen with other amenities such as dumps or transmission lines.
"The economic literature is pretty clear that when you have something like a big power transmission line that's easily visible, that if your property backs up to the data center, if you can actually see it, there's a pretty well defined at least 5,10% loss in property value when something like that comes in," Whitacre said.
Although there are ways to make economic gains, there are opportunity costs. Boyce said if all water resources are put toward a data center, then a community might not be able to go after other development opportunities if the facility is water intensive.
"So I think it's kind of a long-run balancing act of allocating these resources to determine whether this data center development is a good fit for your community across all different types of economic and non-economic considerations," Boyce said.
This report was produced by the Oklahoma Public Media Exchange, a collaboration of public media organizations. Help support collaborative journalism by donating at the link at the top of this webpage.
