My earlier Kansas Policy Institute piece, “Kansas Should Welcome AI Growth, Not Zone It Away”, drew a lot of feedback. Much of it came down to four concerns: water, electricity, zoning, and whether data centers really help local communities. Those are fair questions. Big projects often face scrutiny, and Kansans deserve answers about how new development will affect their communities. This is why there should be transparency for good decisions.
A data center is a physical building full of servers, storage, and networking equipment that makes online services work. That is what companies mean by “the cloud”: not something floating in the sky, but real infrastructure on the ground. That infrastructure supports online banking, telehealth, logistics, streaming, remote work, AI tools, school platforms, and the digital services people use every day. The Goldwater Institute calls data centers “the unseen but indispensable infrastructure of the modern world.” That is right. They are not a fad. They are part of the digital economy’s backbone.
That matters because Kansas is not deciding whether the digital economy will exist. It is about deciding whether the infrastructure behind that economy will be built here or elsewhere.
Water is a major concern, especially in places that worry about long-term water supply. This specific concern is not theoretical in Kansas. The Ol’ West saying of “whiskey is for drinking and water is for fighting” shows no signs of lessening anytime soon. The Kansas Department of Commerce says some facilities use air-cooled systems that use no water for cooling, while others use closed-loop systems that recirculate water rather than constantly drawing fresh supplies. A recent University of Texas review made the same point more broadly: water use depends heavily on cooling design, local climate, and power choices. So “data centers use water” is true, but incomplete. The real questions are how much, under what system, and under what local conditions.
Electricity is another concern, particularly whether ordinary households subsidize these projects. Kansas recently set rules requiring large-load customers to be responsible for transmission and other infrastructure upgrades needed to serve the facility. Kansas law bars eligible data centers from receiving discounted electricity rates for economic development. In other words, the policy baseline in Kansas is not “give them cheap power and send the bill to everybody else.” It is closer to: if a project wants to come, it has to meet Kansas’ rules. Goldwater’s more recent work makes the broader point well: data centers are not “breaking the grid”; bad pricing and supply constraints are. If the electricity rules need improvement, improve them. We need to be careful not to blame one visible industry for exposing the weakness.
Again, this isn’t theoretical. The Kansas Corporation Commission is hardly a consumer watchdog, and sweetheart deals for larger users (we’re looking at you, Panasonic) are troublingly common. Skepticism about how these policies are applied is understandable, given past issues with large-user agreements. Transparency and accountability remain important.
The third concern is zoning and “green fields.” This is often where a debate about one project becomes a broader debate about growth itself.
Communities can have sensible setbacks, traffic planning, noise standards, and local review. But those tools can easily slide into not-in-my-backyard (NIMBY) arguments if they become a way to block any large investment that feels unfamiliar. A recent report on Kansas City zoning fights showed just how quickly that can happen. Kansas should protect property rights and local review without turning zoning into a backdoor ban on the infrastructure behind modern commerce.
Then there is the concern that data centers do not employ enough people. Fully functioning data centers typically employ about 100 people, which isn’t insignificant in some areas. The full economic impact on a community can be much larger in some cases, however. The gains also include major upfront capital spending, years of construction work, demand for local contractors and suppliers, utility investment, and potentially, a longer-run property- and sales-tax base. The long-term tax benefits depend on whether local elected officials use the new revenue to reduce the burden on existing taxpayers or to increase government spending. A PwC report for the Data Center Coalition found that in 2023, the industry supported 4.7 million jobs nationwide and contributed $727 billion to U.S. GDP, with each direct job supporting more than six others elsewhere in the economy. NetChoice makes a similar case, citing the local tax and infrastructure benefits that states have seen from enterprise data centers. When you consider the gains in Kansas, the KC Tech Council notes benefits for businesses around the data center, or those that pop up near it, allowing for a larger positive effect than just the data center.
There is also a bigger strategic point to consider. If data centers are not built here, they will be built somewhere else.
The demand for AI, cloud services, digital payments, and streaming will not disappear because Kansas says no. The investment, tax base, and competitive advantage will just move to another state or another country. And that matters because the race for AI leadership is not abstract.
U.S. policymakers increasingly treat AI infrastructure as part of economic and national-security competition. China benefits if America talks itself out of building the physical infrastructure that will underpin the next economy. There is some evidence of direct Chinese orchestration of local anti-data-center campaigns. But the strategic logic is obvious: if we do not build, our rivals will.
The question each person must decide is whether the potential gains are worth the potential risks after fair consideration of the facts.
Kansas does not need fear-driven policy when it comes to data centers. Along with the ideas about data centers posed by the Buckeye Institute recently, Kansas should consider establishing clear property-rights rules, honest utility pricing, transparent local review, and a willingness to weigh real tradeoffs without turning anxiety into prohibition. That approach allows Kansas to remain competitive while respecting Kansans where these projects may locate.
