Transcript

[00:00:05] Anthony Flint: Welcome to Episode 2 of Season 7 of the Land Matters Podcast. I’m your host, Anthony Flint. Of all the major Supreme Court decisions of the 20th century, there’s one that stands out for shaping the way we live and the physical contours of the American landscape: Village of Euclid v. Ambler Realty Company, which affirmed that cities and towns could institute zoning as a way to regulate all growth and development.

The case came out of a suburb just east of Cleveland in the 1920s when a real estate company sought to use their land for industrial development. The town said no, we want that area to be residential. Ambler Realty sued and the case made it all the way to the Supreme Court. The justices backed the Village of Euclid and in so doing provided constitutional blessing to the basic concept of zoning that we all see in color-coded maps to this day, homes in one part of town, commercial and retail in another, and manufacturing and industrial uses in yet another.

At the time, Justice George Sutherland made the comment that a factory shouldn’t be in a residential area any more than a pig in a parlor. He also said apartment buildings shouldn’t be mixed in with single-family homes, saying the presence of residential density was like welcoming in a parasite. Strong words from Justice Sutherland, to be sure, but from that point on, thousands of municipalities followed the template of separating uses and spreading them around. That was in 1926.

Understandably — not everybody might be aware of this –but scholars and policymakers and others are actually marking the 100th anniversary of the Euclid decision. It’s not so much a celebration but a reconsideration of the landmark ruling, looking at the effect that’s had 100 years later and essentially reassessing what has come to be known as Euclidean zoning itself.

Some 33 states have passed reforms to allow more density in zones once reserved for single-family homes only, and to promote the concept of mixed use, blending housing with shops, restaurants, and workplaces all within walking distance — basically the kind of neighborhoods that Euclid made illegal. The critique suggests that American zoning is outdated and hasn’t kept up with the times, and perhaps, most important, has made housing unaffordable and racially segregated.

With us today to unpack all of this is William Fischel, a professor emeritus at Dartmouth College and author of the book, Zoning Rules, published in 2015 by the Lincoln Institute. That volume is cited in the early pages of Abundance by Ezra Klein and Derek Thompson, who blame excessive regulation for blocking housing and infrastructure projects. Fischel is also the author of The Homevoter Hypothesis, an explanation of how mostly single-family homeowners tend to resist any changes because they’re worried about property values. We’ll discuss that in just a bit.

I should add that Fischel was the keynote speaker at a symposium at George Mason University earlier this year, co-sponsored by the Mercatus Center, the Pacific Legal Foundation, and the Journal of Law, Economics, and Policy, which was featured in Bloomberg City Lab and Land Lines Magazine. He’s a great friend of the Lincoln Institute and served with distinction for many years on the board of the organization. Bill Fischel, welcome to the Land Matters Podcast.

[00:03:31] William Fischel: Thank you, Anthony. Good to be here.

[00:03:33] Anthony Flint: Let’s start toward the beginning of all this, the advent of zoning in the US. One of the fun facts I discovered while researching some of this is that zoning was imported — along with the delicatessen — from Germany after the turn of the last century. Why and how did zoning come to be the go-to policy for guiding growth and development in this country?

[00:03:55] William: Edward Bassett, considered to be the father of zoning: he and other people went to Germany. Germany was the place you went for advanced civilization. In the twenties before World War I, Germany was the high point of culture and science and social science as well. Bassett and some other people went to Germany and studied zoning. He came back with the idea that you could have comprehensive zoning.

Now, comprehensive zoning in Germany turned out was different from comprehensive zoning in the United States. That is, the United States massaged it quite a bit. In Germany, the idea was to split the city into something like thirds, like a pie wedge, so many pie wedges or pizza wedges, where businesses would be in the center, a logical place for them, and along each pie wedge would live the people who worked in that particular industry.

This was to save transportation costs, so you could go back and forth, so all the workers going to the same place could go to the same place at home, regular commuting instead of going in circles and so forth. If you were in the metal industry and there was a metal factory, the metal workers and their bosses would live outside. Now, the bosses lived in nicer homes, maybe a little farther out. It wasn’t like there was great intermixing, but there was this segregation by occupation. That didn’t go anywhere in the United States. We had company towns and things like this where people lived around the factory and so forth.

The zoning that occurred in the United States was really separating residential from commercial from industrial. I grew up in Bethlehem, Pennsylvania, where they had a great big steel mill. Workers clustered around the plant. A lot of people walked to work because they couldn’t afford a car, or it was just more convenient. The clustering was natural there. The separation of uses, commercial from industrial and so forth, was a feature of American zoning from the get-go. I think that was what made it fairly attractive.

[00:05:51] Anthony Flint: Now, there was also some thinking in the progressive era at the time about the health impacts. Can you talk a little bit about that, this idea that congestion and tenement houses and housing of any kind being close to a smelter or a tannery and all of that?

[00:06:08] William Fischel: There was certainly that. The big progressive move actually had occurred in the late 19th century that made cities much more livable. They got decent drinking water, and they dug sewers, got the waste out of the neighborhoods, at least. Those were great advances in public health.

Once that was fixed, people, as people do, want to go to the next best thing, and that is, “Let’s not have these noxious fumes from our factory.” If you’re a steelworker, you endure it during the day, you’d rather not endure it at night. You’d like to be a little farther away from the blast furnaces. That was part of the story. This was an issue that could be fixed by distance.

The plant operators in Pittsburgh got together and said, “It’s so damn polluted, people don’t want to live here. We can’t recruit executives to come from other cities because it’s so polluted.” They actually collectively, along with the state of Pennsylvania, restricted the plants themselves, reducing pollution, relocating them so they weren’t so close to the residents, and more or less cleaned up Pittsburgh by the standards of the time. That was a big accomplishment.

The thing that brought on zoning was the desire for single-family homes. That was usually not a problem when there was simply distance involved. What upset that equilibrium was the invention of the automobile. The automobile, and most importantly, the derivatives of the automobile, something called the motor truck and a jitney bus — a jitney bus was a small bus almost always privately operated that just cruised around neighborhoods, picked up people, and took them to work or took them shopping or whatever. It’s like an airport bus now today in its capacity, not in its comfort. The cheap car and the cheap truck and cheap motor bus made industry and apartment dwellers footloose. They didn’t have to walk to work anymore. The industry could put parts of their business, maybe all of their business, out in much cheaper land in the suburbs.

The industry was suffering from congestion by the docks or by the railhead, competing with other businesses. They say, “Let’s move the warehouse out in the suburbs here. We’ve got this tract of land.” Put up a warehouse or put up some storage place or put up a back office operation. They could do that now that they could truck things from one place to another pretty easily. They didn’t have to be stuck to rail lines or trolley lines. That’s what made the single-family house vulnerable. It couldn’t be cured by distance anymore. It had to be cured by something else.

Eventually, developers in California led the charge here. Everybody was moving to California in the early 20th century, emptying out the Midwest. Developers wanted single-family homes. They wanted that single-family house in the suburbs, out in Pasadena and outside central Los Angeles.

The developers in Southern California faced up to this problem and said, “We need to adopt some collective action.” They got the city of Los Angeles to let them establish their own residential districts. It was really the first zoning laws. The problem that came up in Los Angeles was that industry was having a problem finding a place to locate.

The classic case, Sebastian v. Hadacheck … Mr. Hadacheck had a brick factory. He had it downtown Los Angeles. Residential development occurred around his brick factory. You’d think they would have smelled it first, but there they went. They established one of these residential districts and said, “You’ve got to get out of here. Sorry, Hadacheck. You can’t stay here anymore. You’re in the wrong zone.”

Hadacheck moves away, a couple of miles away, and it’s open land. He builds up his brick factory. He has a brick truck. He’s got that Henry Ford derivative invention of a truck. He can move his bricks. He’s happy as a clam until somebody develops a residential area right next to him. Same thing, deja vu all over again, as Yogi Berra would say. He gets zoned out. He takes this case to the California Supreme Court. The California Supreme Court says, “Too bad. First in time is not first in right.” If you’re making something like a nuisance or a brick factory, they’re not pleasant to be next to. He takes it to the US Supreme Court. The US Supreme Court says, “Too bad. Sorry, Hadacheck. You have to move.”

Los Angeles turns around and says, “We have a problem here. Our problem is we got lots of residential land, but we have no place for them to work. We have no place for them to put brick factory. We can’t do anything if we can’t have our business.” They invent the exclusive industrial zone.

On the other side of the river, no houses allowed, at least no new houses allowed. Industry is free to locate there. Once they do that, they have something that looks comprehensive. Just before they do that, New York comes up with it’s comprehensive zoning. My friend, Edward Bassett, writes the zoning law, pretty much, and separates commercial and apartments and so forth in all five boroughs. New York City is a big place, even bigger than Los Angeles back then. Those two events are the birth of zoning.

[00:11:36] Anthony Flint: Now, there’s another theme underpinning some of this in zoning, and that is racial segregation. How did zoning end up becoming a tool to set down the rules for who lived where?

[00:11:49] William: Modern zoning and zoning stemming from Euclid was not who lived where, but what you could do where. It wasn’t a matter of Jones and Smith have to live on this said street and Brown and White have to live on the other side. It was about residential versus commercial versus industrial, and always the size of that house and so forth.

The mix-up, the mash-up here, and I think people are understandably both confused and concerned by this, is that there’s a case before Euclid called Buchanan v. Warley. In Buchanan v. Warley, it started in the border states of the South: Maryland, Kentucky, Tennessee, and Missouri, and so forth. Prior to World War II, a lot of industry is starting to develop, partly generated by demand for US products from the outbreak of the war.

Lots of Black people are coming to these cities. They’re sick of being sharecroppers and being discriminated against, and so they move north to cities. The cities of the border south are quite unwelcoming to Black residents. They’re okay with them in their factories, but they want them to live in their own place. There’s no law that says that Black people have to live in this section and white people live in that section, so they make a law that says exactly that. The law says, “In this area, wherever there are majority whites located in a block, then Black people cannot live there, either rent or buy, except as servants.” This is really virtually an apartheid ordinance.

This law is taken to the US Supreme Court, Buchanan v. Warley, nine years before Euclid, hears the case. It takes a look at the 14th Amendment of the United States, which says life, liberty, and property shall not be denied them anyway. It says, “No, this violates the Constitution and strikes down the law unanimously.” Conservative, liberal, everybody in between says, “No, that will not fly.”

Some of the cities go and try and tweak it a little bit. They see this thing called zoning. Zoning comes in after this and doesn’t mention race or anything about the characteristics of people who might occupy. It just says use. It divides things up. There were residential zones. There were residential zones that allowed apartments. There were commercial zones. There were industrial zones. These zones, in ways that you’d look back at it and say, “It looks sensible.” The residential zones are along these loopy streets that you see in suburbs that were popular back then. The main drag is zoned for apartments.

What Euclid does mainly is says, “It’s okay to separate these uses. We’re not giving you standards as to how to separate them. We’re not telling you what the property is. You’re not telling us you can separate by race. We already struck that down.” Cities kept attempting it, and the courts, even the state courts in the South, were striking it down. It never got any real traction. Zoning, on the other hand, blasted out the gate once the Supreme Court said, “Okay.” The irony here is that developers now complain about the zoning regulations and so forth. Zoning was a developer idea.

[00:14:54] Anthony Flint: All of these threads continue to intertwine through the Great Depression and World War II, through the well- documented practice of redlining certain areas to be eligible for mortgages, the prevalence of racial covenants, on through with the development of places like Levittown and increasingly larger lots that only certain people can afford.

What’s so remarkable is that these rules got so locked in, as you point out, with the owners of primarily single-family homes buttressed by environmental laws and the growth management movement, at least since about 1970. Can you talk a little bit about why it was effectively defended for so long and, of course, continues to be, and that is this idea of nimbyism or not in my backyard?

[00:15:39] William Fischel: I’ve been studying zoning for 50 years. I looked at zoning and I thought it looked too restrictive from an economics point of view, but I said, “Why is this?” I needed to understand not just how zoning operated, but who was behind zoning. I looked around and was on the Hanover (New Hampshire) zoning board. I’m looking at who’s showing up at my meetings. They’re homeowners.

Asking myself, “Why are they going on about these proposed developments near their homes that look perfectly benign to me, better than most, and going on like the earth will end if this project gets done?” It hits me in a financial sense that these people, homeowners like myself, maybe like you, have a very large asset in their financial portfolio.

I’m thinking like an economist. This asset, unlike stocks that you might own, is not diversified. My pension fund is diversified. If General Motors goes south, Tesla will take up the slack, big deal, diversified portfolio. Most of my other assets, about half of my assets, I would estimate, are in my home. If that goes south, there’s no diversification. I can’t pick up my home and move it to another neighborhood. I can’t put my home up in parts and sell it to other parties to make a mutual fund out of it. I’m stuck with a very undiversified asset.

I developed the idea that homeowners are acute, overly, acutely aware of the risk, not just the value, the risk that their home endures because it’s in one place, in one industry, in one location, and they’ve got to defend it. They have to defend it more than you would think would be rational because they’re not just thinking about the expected outcome, they’re thinking about the risk. They show up at the zoning board and behave like they’re irrationally concerned when they’re not irrationally concerned. They’re NIMBYs. They’re not in my backyard.

Now, these people are not terribly effective until 1970. The environmental movement gives them a tool to run around me on the zoning board, to go to court and have the courts decide this. Now, the courts might be sensible places to do, but they take time. For developers, time is money. They’ve bought the land on a loan and they’ve got to pay interest. The bank is not waiting for them. They make compromises. “Oh, we wanted to have quarter-acre lots here. How about I make them half-acre lots or 2-acre lots or something like that?” Low density zoning because I can’t wait for you to decide.

Then lots of the environmental laws become really fussy about things like wetlands. Doubles the amount of land that is taken off the market where developers can’t go or they can’t go without conditions from the zoning board or the planning board to do it. Again, taking time, taking money to do it. This gets multiplied. The environmental movement is at the root of this. It’s not a crazy movement, but it’s taken to extremes by people who are not so much concerned about the environment as the value of their homes.

[00:18:34] Anthony Flint: Now that’s changing.

[00:18:35] William Fischel: I think eventually excessive success generates sometimes a collapse. I think that’s what we’re seeing now. I hope it’s a gentle collapse. I don’t want them to throw out all environmental laws. I don’t want them to fill in all the wetlands or disregard the important environmental issues. They’ve been taken to extremes and they’ve been abused by local groups.

What I’m seeing here is not simply state laws that say, “Towns, you have to pay attention to housing,” but also courts that are saying, “Hey, guys, this endless environmental invocations to stop development have to have an end.” It does have what economists would call an opportunity cost. That opportunity cost is housing and a stratified society and a stultified economy. That’s what the authors of Abundance have pointed out and saying, “We don’t have to be that way.”

One of the things that occasionally makes me happy to be in a diverse democracy is people occasionally say, “Yes, we have to change our ways.” I’m seeing people change their ways and changing their attitudes towards this. I don’t want to run back to 1916 and just get rid of zoning. I think the idea that we can just abolish zoning is very wishful thinking.

[00:19:48] Anthony Flint: A process where zoning is continually tweaked and revisited and an acknowledgement that times have changed, especially with affordability being so front and center.

[00:20:01] William Fischel: I don’t think if we abolished zoning, we would get rid of our racial problems by any stretch of the imagination. I think once you get the town manager or the city manager saying, “I’m sorry. We can’t fill out the ranks of the fire department because we can’t get people to move here,” that gets people’s attention after a while. The private sector has been complaining about that for a while.

Now I think there’s real traction of people feeling the consequences of this excessive fussiness about who your neighbors are that it’s starting to be at least chipped away at by state and even local legislation. I’ve been critical of my own town, but I’ll give my town a bit of credit. We have an infill development in process that allows single-family homes to be converted to two-family, even four-family homes in the neighborhoods. There is resistance, but it was generated entirely by the town council.

You present people with the facts and enough evidence, real-time evidence, sometimes they come around and say, “Yes, we do have to change our ways.” I’m encouraged. I’ve been retired from teaching for six years, but I’m happy to spread some of the hopefully good news of land use regulations that accommodate more people, outsiders, and a larger spectrum of the social and, of course, the racial spectrum that makes the United States an interesting place.

[00:21:17] Anthony Flint: What’s so interesting to me is just how these rules that most people don’t spend a lot of time thinking about really shape our society and how we live.

[00:21:28] William Fischel: One of the things I discovered on the zoning board is how naive, at least from our point of view, people are about zoning. Until something happens in the neighborhood, then they get well-informed. Then they understand what the rules are. I think enough things are happening from enough different points of view that some change is likely to happen. I don’t think it will be without rough spots, but I see the general trend as positive here.

[00:21:49] Anthony Flint: Bill Fischel, thank you so much for joining the conversation at Land Matters.

[00:21:54] William Fischel: You’re welcome.

[00:21:54] Anthony Flint: You can find more background on the Euclid case and Bill Fischel’s book, Zoning Rules, at the Lincoln Institute website, lincolninst.edu. Zoning has a special place in the history of the Lincoln Institute.

We actually had our own symposium on Euclid, if you can believe it, in 1986 on the occasion of the 60th anniversary of the decision, co-organized by Charles Haar and Jerold Kayden from Harvard, and led to the publication of Zoning and the American Dream: Promises Still to Keep, published in 1989. That book, in turn, was reviewed in Cite Journal, a publication of Rice University, under a headline that has to be one of the most clever in scholarly writing about land use: “Here’s Looking at Euclid.”

There’s an additional wonderful Henry George thread here as well. The lawyer for Ambler Realty, Newton Baker, succeeded Tom Johnson as mayor of Cleveland and was similarly a dedicated Georgist, alongside none other than John C. Lincoln, the founder of the Lincoln Institute, who was active as an inventor and entrepreneur in the Cleveland area around the turn of the last century.

One way or the other, we look at zoning and land use regulation, especially as it pertains to housing construction today, pretty much on a continual basis. After all, zoning is about land and we’re the Lincoln Institute of Land Policy. On social media, our handle is @landpolicy. Please go ahead and rate, share, and subscribe to Land Matters, the podcast of the Lincoln Institute of Land Policy. For now, I’m Anthony Flint signing off until next time.

Transcript

Anthony Flint: Welcome back to the Land Matters Podcast. I’m your host, Anthony Flint. I think it’s safe to say that the proliferation of data centers was one of the biggest stories of 2025, and at the end of the day, it’s a land use story braided together with energy, the grid, power generation, the environment, carbon emissions, and economic development – and, the other big story of the year, to be sure, artificial intelligence, which is driving the need for these massive facilities.

There’s no federal registration requirement for data centers, and sometimes owners can be quite secretive about their locations for security reasons and competitive advantage. According to the industry database data center map, there are at least 4,000 data centers across the US. Some would say that number is closer to 5,000, but unquestionably, there are hundreds more on the way.

A third of US data centers are in just three states, with Virginia leading the way, followed by Texas and California. Several metropolitan regions have become hubs for these facilities, including Northern Virginia, Dallas, Chicago, and Phoenix, and the sites tend to get added onto with half of data centers currently being built being part of a preexisting large cluster, according to the International Energy Agency.

These are massive buildings housing computer servers, data storage systems, and networking equipment, as well as the power and cooling systems that keep them running. That’s according to the Pew Research Center, which points out that whenever you send an email, stream a movie or TV show, save a family photo to the cloud, or ask a chatbot a question, you’re interacting with a data center. They use a lot of power, which the tech companies initially promised would be clean energy, but now, with so much demand, they’re turning largely to fossil fuels like gas and even coal, and in some cases, considering nuclear power.

A single large data center can gobble up as much power as a small city, and they’re largely being fast-tracked, in many cases, overwhelming local community concerns. They’re getting tax breaks and other incentives to build with breathtaking speed, and there’s a major PR effort underway to accentuate the positive. You may have seen some of those television ads touting the benefits of data centers, including in areas that have been struggling economically.

To help make sense of all of this, I’m joined by three special guests, Jon Gorey, author of the article Data Drain: The Land and Water Impacts of Data Centers, published earlier this year at Land Lines Magazine; Mary Ann Dickinson, Policy Director for Land and Water at the Lincoln Institute; and Chris Miller, President of the Piedmont Environmental Council, who’s been tracking the explosion of data centers in Northern Virginia.

Well, thank you all for being here on Land Matters, and Jon, let me start with you. You’ve had a lot of experience writing about real estate and land use and energy and the environment. Have you seen anything quite like this? What’s going on out there? What were your takeaways after reporting your story?

Jon Gorey: Sure. Thank you, Anthony, for having me, and it’s great to be here with you and Mary Ann, and Chris too. I think what has surprised me the most is the scale and the pace of this data center explosion and the AI adoption that’s feeding it. When I was writing the story, I looked around the Boston area to see if there was a data center that I could visit in person to do some on-the-ground reporting.

It turns out we have a bunch of them, but they’re mostly from 10, 20 years ago. They’re pretty small. They’re well-integrated into our built environment. They’re just tucked into one section of an office building or something next to a grocery store. They’re doing less intensive tasks like storing our emails or cell phone photos on the cloud. The data centers being built now to support AI are just exponentially larger and more resource-intensive.

For example, Meta is planning a 715,000-square-foot data center outside the capital of Wyoming, which is over 16 acres of building footprint by itself, not even counting the grounds around it. That will itself use more electricity than every home in Wyoming combined. That’s astonishing. The governor there touted it as a win for the natural gas industry locally. They’re not necessarily going to supply all that energy with renewables. Then there’s just the pace of it. Between 2018 and 2021, the number of US data centers doubled, and then it doubled again by 2024.

In 2023, when most people were maybe only hearing about ChatGPT for the first time, US data centers were already using as much electricity as the entire country of Ireland. That’s poised to double or triple by 2028. It’s happening extremely fast, and they are extremely big. One of the big takeaways from the research, I think, was how this creates this huge cost-benefit mismatch between localities and broader regions like in Loudoun County, Virginia, which I’m sure Chris can talk about.

The tax revenue from data centers, that’s a benefit to county residents. They don’t have to shoulder as much of the bills for schools and other local services. The electricity and the water and the infrastructure and the environmental costs associated with those data centers are more dispersed. They’re spread out across the entire utilities service area with higher rates for water, higher electric rates, more pollution. That’s a real discrepancy and it’s happening pretty much anywhere one of these major data centers goes up.

Anthony Flint: Mary Ann Dickinson, let’s zoom in on how much water these data centers require. I was surprised by that. In addition to all the power they use, I want to ask you, first of all, why do they need so much water, and where is it coming from? In places like the Southwest, water is such a precious resource that’s needed for agriculture and people. It seems like there’s a lot more work to be done to make this even plausibly sustainable.

Mary Ann Dickinson: Well, water is the issue of the day right now. We’ve heard lots of data center discussion about energy. That’s primarily been the focus of a lot of media reporting during 2025. Water is now emerging as this issue that is dwarfing a lot of local utility systems. Data centers use massive amounts of water. It can be anywhere between 3 and 5 million gallons a day. It’s primarily to answer your question for cooling. It’s a much larger draw than most large industrial water users in a community water system.

The concern is that if the data centers are tying into local water utilities, which they prefer because of the affordability and the reliability and the treatment of the supply, that can easily swamp a utility system that is not accustomed to that continuous, constant draw. These large hyperscale data centers that are now being built can use hundreds of millions of gallons yearly. That’s equivalent to the water usage of a medium-sized city.

To Jon’s point, if you look at how much water that is being consumed by a data center in very water-scarce areas in the West in particular, you wonder where that water is going to come from. Is it going to come from groundwater? Is it going to come from surface water supplies? How is that water going to be managed and basically replaced back into the natural systems, like rivers, from which it might be being withdrawn? Colorado River, of course, being a prime example of an over-allocated river system.

What is all this water going for? Yes, it’s going for cooling, humidification in the data centers, it’s what they’re calling direct use, but there’s also indirect use, which is the water that it takes to generate the electricity that supplies the data center. The data center energy loads are serious, and Chris can talk about the grid issues as well, but a lot of that water is actually indirectly used to generate electricity, as well as directly used to cool those chips.

This indirect use can be substantial. It can be equivalent to about a half a gallon per kilowatt hour. That can be a fair amount of water just for providing that electricity. What we’re seeing is the average hyperscale data center uses about half a million gallons of water a day. That’s a lot of water to come from a local community water system. It’s a concern, and especially in the water-scarce regions where water is already being so short that farmers are being asked to fallow fields, how is the data center water load going to be accommodated within these water systems?

The irony is the data centers are going into these water-scarce regions. There was a Bloomberg report that showed that, actually, water-scarce regions were the most popular location for these data centers because they were approximate to areas of immediate use. That, of course, means California, it means Texas and Phoenix, Arizona, those states that are already struggling with providing water to their regular customers.

It’s a dilemma, and it’s one that we want to look at a lot more closely to help protect the community water systems and give them the right questions to ask when the data center comes to town and wants to locate there, and help them abate the financial risk that might be associated with the data center that maybe comes and then goes, leaving them with a stranded asset.

These are all complex issues. The tax issues tie into the water issues because the water utility system and impacts to that system might not be covered by whatever tax revenues are coming in. As sizable as they might be, they still might not be enough to cover infrastructure costs that then would otherwise be given to assess to the utility ratepayers. We’re seeing this in the energy side. We’re seeing electric rates go up. At the same time, we know these data centers are necessary given what we’re now as a society doing in terms of AI and digital computing.

We just have to figure out the way to most sustainably deal with it. We’re working with technical experts, folks from the Los Alamos National Lab, and we’re talking with them about the opportunities for using recycled water, using other options that are not going to be quite as water-consumptive.

Anthony Flint: Yes, we can talk more about that later in the show — different approaches, using gray water or recycled water, sounds like a promising idea because at the end of the day, there’s only so much water, right? Chris Miller, from the Piedmont Environmental Council, you pointed out, in Jon’s story, that roughly two-thirds of the world’s internet traffic essentially passes through Northern Virginia, and the region already hosts the densest concentration of data centers anywhere in the world. What’s been the impact on farmland, energy, water use, carbon emissions, everything? Walk us through what it’s like to be in such a hot spot.

Chris Miller: The current estimate is that Virginia has over 800 data centers. It’s a little hard to know because some of them are dark facilities, so not all of them are mappable, but the ones we’ve been able to map, that’s what we’re approaching. For land use junkies, there’s about 360 million square feet of build-approved or in-the-pipeline applications for data centers in the state. That’s a lot of footprint. The closest comparison I could make that seemed reasonable was all of Northern Virginia has about 150,000 square feet of commercial retail space.

We are looking at a future where just the footprint of the buildings is pretty extraordinary. We have sites that are one building, one gigawatt, almost a million square feet, 80 feet high. You just have to think about that. That’s the amount of power that a nuclear reactor can produce at peak load. We’re building those kinds of buildings on about 100 acres, 150 acres. Not particularly large parcels of land with extraordinary power density of electricity demand, which is just hard to wrap your head around.

The current estimate in Virginia for aggregate peak load demand increase in electricity exclusively from data centers is about 50 gigawatts in the next 20 years. That’ll be a tripling of the existing system. Now, more and more, the utilities, grid regulators, the grid monitor for PJM, which is a large regional transmission organization that runs from Chicago all the way to North Carolina.

As Anthony said, the existing system is near breaking point, maybe in the next three years. If all the demand came online, you would have brownouts and blackouts throughout the system. That’s pretty serious. It’s a reflection of the general problem, which is that there is no system of planning for the land use, for the energy consumption, for the water consumption. Larger impacts on land, agricultural, forestal land, historic scenic, cultural resources, biodiversity sites. There’s no assessment being made.

To the extent that there’s project-level review, there’s a lot of discussion about eliminating most of that to streamline this process. There is no aggregate assessment. That’s what’s terrifying. We have local land use decisions being made without any information about the larger aggregate impacts in the locality and then beyond. Then the state and federal governments are issuing permits without having really evaluated the combined effect of all this change.

I think that’s the way we’re looking at it. Change is inevitable. Change is coming. We should be doing it in a way that’s better than the way we’ve done it before, not worse. We need to do it in a way that basically is an honest assessment of the scale and scope, the aggregate impacts, and then apply the ingenuity and creativity of both the tech industry and the larger economy to minimize the impact that this has on communities and the natural resources on which we all depend on.

It’s getting to the point of being very serious. Virginia is water-constrained. It doesn’t have that reputation, but our water supply systems are all straining to meet current demand. The only assessment we have on the effect of future peak load from data centers is by the Interstate Commission on the Potomac River Basin, which manages the water supply for Washington metropolitan region in five states.

Their conclusion is, in the foreseeable future, 2040, we reach a point where consumption exceeds supply. Think about that. We’re moving forward with [facilities]  as they create a shortage of water supply in the nation’s capital. It’s being done without any oversight or direction. The work of the Lincoln Institute and groups like PEC is actually essential because the governmental entities are paralyzed. Paralyzed by a lack of policy structure, they’re also paralyzed by politics, which is caught between the perception of this is the next economic opportunity, which funds the needs of the community.

The fact is, the impacts may outweigh the benefits. We have to buckle down and realize this is the future. How do we help state, local, federal government to build decision models that take into account the enormous scale and scope of the industry and figure out how to fix the broken systems and make them better than they were before? I think that’s what all of us have been working on over the last five years.

Anthony Flint: It really is extraordinary, for those of us in the world of land use and regulations. We’ve heard a lot about the abundance agenda and how the US is making it more difficult to build things and infrastructure. Whether it’s clean energy or a solar farm or a wind farm, they have to go through a lot of hoops. Housing, same way. Here you have this — it’s not just any land use; it’s just this incredibly impactful land use that is seemingly not getting any of that oversight or making these places go through those hoops.

Chris Miller: They are certainly cutting corners. Jon mentioned the facility outside of Boston. What did you say, 150 acres? We have a site adjacent to the Manassas National Battlefield Park, which is part of the national park system, called the Prince William Digital Gateway, which is an aggregation of 2100 acres with plans for 27 million square feet of data centers with a projected energy demand of up to 7.5 gigawatts. The total base load supply of nuclear energy available in Virginia right now is just a little bit over 3 gigawatts.

The entire offshore wind development project at Dominion is 80% complete, but what’s big and controversial is 2.5 gigawatts. The two biggest sources of base load supply aren’t sufficient to meet 24/7 demand from a land use proposal on 2100 acres, 27 million square feet, that was made without assessing the energy impact, the supply of water, or the impact of infrastructure on natural, cultural, and historic resources, one of which is hallowed ground. It’s a place where two significant Civil War battlefields were fought. It’s extraordinary.

What’s even more extraordinary is to have public officials, senators, congressmen, members of agencies say, “We’re not sure what the federal next steps [are].” These are projects that have interstate effects on power, on water, on air quality. We haven’t talked about that, but one of the plans that’s been hatched by the industry is through onsite generation and take advantage of the backup generation that they’ve built out. They have to provide 100% backup generation onsite for their peak load. They’ve 90% of that in diesel without significant air quality controls.

We have found permits for 12.4 gigawatts of diesel in Northern Virginia. That would bust the ozone and PM2.5 regulatory standards for public health if they operated together. It’s being discussed by the Department of Environmental Quality in Virginia as a backup strategy for meeting power demand so that data centers can operate without restriction. These are choices that are being proposed without any modeling, without any monitoring, and without any assessment of whether those impacts are in conflict with other public policy goals, like human health. Terrifying.

We are at a breaking point. I have to say that the grassroots response is a pox upon all your houses. That was reflected in the 2025 elections that Virginia just went through. The tidal wave of change in the General Assembly and statewide offices and data centers and energy costs were very, very high on the list of concerns for voters.

Anthony Flint: I want to ask all three of you this question, but Jon, let me start with you. Is there any way to make a more sustainable data center?

Jon Gorey: Yes, there are some good examples here and there. It is, in some cases, in their best interest to use less electricity. It’ll be less expensive for them to use less water. Google, for its part, has published a pretty more transparent than some companies in their environmental report. They compare their water use in the context of golf courses irrigated, which does come across as not a great comparison because golf courses are not a terrific use of water either.

They do admit that last year, 2024, they used about 8.1 billion gallons of water in their data centers, the ones that they own, the 28% increase over the year before, and 14% of that was in severely water-stressed regions. Another 14% was in medium stress. One of their data centers in Council Bluffs, Iowa, consumed over a billion gallons of water by itself. They also have data centers, like in Denmark and Germany, that use barely a million gallons over the course of a year.

I don’t know if those are just very small ones, but I know they and Microsoft and other companies are developing … there’s immersive cooling, where instead of using evaporative water cooling to cool off the entire room that the servers are in, you can basically dunk the chips and servers in a synthetic oil that conducts heat but not electricity. It’s more expensive to do, but it’s completely possible. There are methods. There’s maybe some hope there that they will continue to do that more.

Mary Ann Dickinson: Immersive cooling, which you’ve just mentioned, is certainly an option now, but what we’re hearing is that it’s not going to be an option in the future, that because of the increasing power density and chips, they are going to need direct liquid cooling, period, and immersive cooling is not going to work. That’s the frightening part of the whole water story is as much or as little water is being used now, is going to pale against the water that’s going to be used in the next 5 to 10 years by the new generation of data centers and the new chips that they’ll be using.

The funny thing about the golf course analogy is that, in the West, a lot of those golf courses are irrigated with recycled water. As Chris knows, it also recharges back into groundwater. It is not lost as consumptive loss. That’s the issue is, really, to make these sustainable, we’re going to need to really examine the water cooling systems, what the evaporative loss is, what the discharge is to sewer systems, what the potential is for recycled water. There’s going to be a whole lot of questions that we’re going to ask, but we’re not getting any data.

Only a third of the data centers nationally even report their energy and water use. The transparency issue is becoming a serious problem. Many communities are being asked to sign NDAs. They can’t even share the information that a data center is using in energy and water with their citizens. It is a little bit of a challenge to try and figure out the path going forward. It’s all about economics, as Chris knows. It’s all about what can be afforded.

The work we’re doing at the Lincoln Institute, we would like to suggest as many sustainable options from the water perspective as possible, but they’re going to have to be paid for somewhere. That is the big question. Data centers need to pay.

Chris Miller: I think we’re entering a [time] where innovation is necessary. It has to be encouraged, and it’s where a crisis, just short of what we saw with lapse of the banking system in 2008, 2009, where no one was really paying attention to the aggregate system-wide failures. Somebody had to step up and say it’s broken. In the case of the mortgage crisis, it was actually 49 states coming to a court, saying, “We have to have a settlement so that we can rework all these mortgages and settle out the accounts and rebuild the system from no ground up.”

I think that’s the same place we’re at. We have to have a group of states get together and saying, “We are going to rebuild a decision model that we use for this new economy. It’s not going away. Any gains in efficiency are going to be offset by the expansion on demand for data. That’s been the trend for the last 15 years. We have to deal with the scale and the scope of the issue. I’ll give you just one example.

Dominion Energy has published at an aggregated contracts totaling 47.1 gigawatts of demand that they have to meet. Their estimate of the CapEx to do that ranges for 141 billion to 271 billion depending on whether they comply with the goals of the Virginia Clean Economy Act and move towards decommissioning and replacement of existing fossil fuel generation with cleaner sources. That range is not the issue. It’s the bottom line, which is 150 to 250 $300 billion in CapEx in one state for energy infrastructure. That’s enormous. We need a better process than a case-by-case review of the individual projects.

The state corporation does not maintain a central database of transmission and generation projects, which it approves. The state DEQ does not have a central database for water basin supply and demand. The state DEQ does not have a database of all of the permits in a model that shows what the impacts of backup generation would be if they all turned on at the same time in a brownout or blackout scenario. The failure to do that kind of systems analysis that desperately needs to be addressed. It’s not going to be done by this administration at the federal level.

It’s going to take state governments working together to build new systems decision tools that are informed by the expertise of places like the Lincoln Institute, so that they’re looking at this as a large-scale systemic process. We build it out in a way that’s rational, that takes into account the impacts of people and on communities and on land, and does it a way that fairly distributes the cost back to the industry that’s triggering the demand.

This industry is uniquely able to charge the whole globe for the use of certain parts of America as the base of its infrastructure. We should be working very hard on a cost allocation model and an assignment of cost to data center industry that can recapture the economic value and pay themselves back from the whole globe. No reason for the rate payers of Virginia or Massachusetts or Arizona, Oregon to be subsidizing the seven largest corporations in the world, the [capital expenditures] of over $22 trillion. It’s unfair, it’s un-American, it’s undemocratic.

We have to stand up to what’s happening and realize how big it is and realize it’s a threat to our way of life, our system of land use and natural resource allocation and frankly, democracy itself.

Anthony Flint: I want to bring this to a conclusion, although certainly there are many more issues we could talk about, but I want to look at the end user in a way and whether we as individuals can do anything about using AI, for example. I was talking with Jon, journalist-to-journalist, about this. I want to turn to you, Jon, on this question. Should we be trying not to use AI, and is that even possible?

Jon Gorey: The more I researched this piece, the more adamant I became that I shouldn’t be using it where possible. Not that that’s going to make any difference, but to me, it felt like I don’t really want to be a part of it. I expect there’s legitimate and valuable use cases for AI and science and technology, but I am pretty shocked by how cavalier people I know, my friends and family, have been in embracing it.

Part of that is that tech companies are forcing it on us because they’ve invested in it. They’re like, “Hey, we spent all this money on this, you got to use it.” It takes some legwork to remove the Google Assist from your Google searches or to get Microsoft Copilot to just leave you alone. I feel like that’s like it’s ancestor Clippy, the paperclip from Microsoft Office back in the day.

Here’s something that galls me more in a broader sense. I don’t know if we want to get into it, but I’m an amateur musician. I’m amateur because it’s already very difficult to make any money in the arts. There’s a YouTube channel with 35 million subscribers that simply plays AI-generated videos of AI-generated music, which is twice as many subscribers as Olivia Rodrigo has and 20 times as many as Gracie Abrams. Both of them are huge pop stars who sell out basketball arenas. It astounds me, and I don’t know why people are enjoying just artificially created things. I get the novelty of it, but I, for one, am trying to avoid stuff like that.

Chris Miller: We were having a debate about this issue this week on a series of forums. The reality is there’s stuff that each of us can do to significantly reduce our data load. It takes a little bit of effort. Most of us are storing two or three times what we need to, literally copies of things that we already have. There’s an efficiency of storage thing that takes time, and that’s why we don’t do it. There’s the use of devices appropriately.

If you can watch a broadcast television show and not stream it, that’s a significant reduction in load, actually. Ironically, we’ve gone from broadcast through the air, which has very little energy involved, to streaming on fiber optics and cable, and then wireless, which is incredibly resource-intensive. We’re getting less efficient in some ways in the way we use some of these technologies, but there are things we can do.

The trend in history has been that doesn’t actually change overall demand. I think we need to be careful as we think about all the things we can do as individuals to not lose sight of the need for the aggregate response, the societal-wide response, which is this industry needs to check itself, but it also needs to have proper oversight. The notion that somehow they’re holier than the rest of us is totally unsustainable.

We have to treat them as the next gold rush, the next offshore drilling opportunity, and understand that what they are doing is globally impactful, setting us back in terms of the overall needs to address climate change and the consumption of energy, and threatens our basic systems for water, land, air quality that are the basis of human life. If those aren’t a big enough threat, then we’re in big trouble.

Anthony Flint: Mary Ann, how about the last word?

Mary Ann Dickinson: When I looked up and saw that every Google search I do, which is AI backed these days, is half a liter of water, each one, and you think about the billions of searches that happen across the globe, this is a frightening issue. I’m not sure our individual actions are going to make that big a difference in the AI demand, but what we can require is, in the siting of these facilities, that they not disrupt local sustainability and resiliency efforts. That’s, I think, what we want to focus on at the Lincoln Institute. It’s helping communities do that.

Anthony Flint: Jon Gorey, Mary Ann Dickinson, and Chris Miller, thank you for this great conversation on the Land Matters Podcast. You can read Jon Gorey’s article, Data Drain, online at our website, lincolninst.edu. Just look for Land Lines magazine in the navigation. On social media, the handle is @landpolicy. Don’t forget to rate, share, and subscribe to the Land Matters Podcast. For now, I’m Anthony Flint signing off until next time.