How do data centres affect local communities?

Data centre-development proposals are popping up across the country. And not everyone is happy about it. 

As Canadians use more digital services — online banking, streaming services and particularly AI platforms — demand for computing power keeps growing. Meeting these demands means building data centres to support our increasingly digital lives. 

Homeowners near these proposed facilities are asking hard questions: What will this do to my property value? My utility bills? My neighbourhood? 

University of Calgary researcher Dr. Qiang Wang aims to answer some of those questions.

Following the data 

Wang, PhD, an assistant professor of finance at the Haskayne School of Business, is the recipient of an Insight Development Grant from the Social Sciences and Humanities Research Council (SSHRC) – federal funding that supports research in its early stages. 

Wang’s research investigates how data centres affect municipal finances and local housing markets. 

“Data centres appear in headlines almost daily, and most headlines are asking broad questions: Why do we need them and should we welcome them?” says Wang. 

To measure the effects of data centres, Wang compares communities that develop these facilities with similar communities that do not.  

Wang’s research approach is designed to create an “apples-to-apples” comparison, she says. By comparing changes in the community over time, Wang can estimate effects on housing values, tax revenues and government borrowing costs.

A growing divide 

Wang’s research comes as communities across Canada weigh the costs and benefits of welcoming these facilities. 

Alberta is actively courting these facilities, hoping to become North America's top destination for data centre development. Mississauga is doing the opposite: the city has paused new data centre construction for a year to study the impacts on infrastructure, the environment, noise and water use.

The split reflects a bigger tension playing out across the country. 

Data centres can bring big private investment. They can potentially also bring new tax revenue for the governments that host them. But they also use enormous amounts of electricity and water, require significant infrastructure and can generate noise.

Wang’s early findings offer some answers. 

What happens to nearby home values?

Wang's preliminary findings suggest data centres can affect nearby housing values.

Based largely on data from the U.S., her research has found that homes near newly built facilities have sold for about seven per cent less than prior to construction.

Wang says this finding reflects how homeowners and potential buyers feel about having a large facility nearby.

“There is also a concern that, over time, data centres will continue to expand,” says Wang. 

The cost to local governments 

The effects on local government finances appear more subdued, says Wang. 

“We don’t see much change in municipal borrowing cost, which reflects fiscal health,” she says, adding the promised tax revenues these facilities will generate are more complicated than advertised. 

“Municipalities are offering data centre companies tax breaks lasting five to 20 years,” says Wang, meaning her data doesn’t capture purported tax benefits. 

Still, Wang’s early findings show government revenue and infrastructure costs rising after data centres move in. In some cases, these companies help pay for and upgrade infrastructure which benefits entire communities.

Before we break ground 

For Wang, the bigger question isn't simply whether data centres are good or bad.

There are still relatively few such projects in Canada compared with the U.S. and China, which is one reason Wang's research relies heavily on international data.

But, as more proposals emerge across Canada, the questions her research is asking are becoming increasingly urgent.

Data centres will continue to be built, Wang says, but questions about their local impacts still need answers.