Data centers are dealing hidden damage to environmental and public health—costing the economy $25 billion every year

Data centers carry a hidden cost that dwarfs their price tag, according to new research. It’s not money. It’s the health of Americans living near them. In North America, the sprawling server farms used to train and run artificial intelligence models received a $47 billion investment surge last year, building out everything from cooling equipment to plumbing. The tech companies at the center of the data center craze, such as Meta and Google , took out $182 billion in loans last year to fund their splurge, double what they borrowed in 2024. One of the primary criticisms of the data center construction craze has been its environmental effect, including the facilities’ impact on water, land, and electricity use. But that cost might also directly affect local residents and their health, according to findings from a National Bureau of Economic Research working paper published earlier this month. The analysis of around 2,800 operational data centers was authored by Nicholas Muller, an economist at Carnegie Mellon University. Muller tracked data centers’ electricity needs last year and found how much air pollution and additional planet-warming greenhouse gases local grids generated to supply that demand. The author derived indicators, such as the risk of premature mortality associated with data centers’ electricity needs, and converted those measurements into dollar amounts using standard estimates, such as the social cost of carbon, which measures the economic damage of each additional ton of carbon released into the atmosphere. The result is that data centers’ environmental damage last year cost the economy at large $25 billion, of which $3.7 billion is directly tied to AI activities in data centers. This price tag represents an externality—an indirect consequence of economic activity that imposes costs on third parties not directly involved in the original activity. Rather than reflecting an increase in day-to-day medical expenses or higher taxes to subsidize a greater …