The Hidden Costs of Digital Urbanization

Introduction

In 2022, farmers in Zeewolde, a small agricultural municipality east of Amsterdam, protested Meta's plan to build the Netherlands' largest data center on their farmland. This plan had emerged as part of a broader push to support Amsterdam's expanding urban economy by expanding digital infrastructure. In the years leading up to 2022, the Amsterdam metropolitan region, which hosts one of Europe's largest concentrations of data centers, had paused approvals for new hyperscale facilities as available land shrank and pressure on the power grid increased.

Faced with these limits, large technology firms began searching for sites outside the city in nearby rural and peri-urban areas. Zeewolde quickly became a target. Yet the town's agricultural economy depends heavily on land and water resources—a hyperscale data center would not only consume vast amounts of electricity but also require continuous access to cooling water.

The conflict in Zeewolde demonstrates how rapid urban growth puts pressure on surrounding communities. As cities expand, they rely increasingly on digital infrastructure to maintain an array of private and public services. Building that infrastructure in urban areas is often impractical due to space and energy constraints. As a result, data centers and related facilities are pushed outward into peri-urban regions. The conflict over data center expansion highlights the need for urban planning systems that align digital growth with the needs of surrounding communities.

Land Energy Constraints Driving Peri-Urban Expansion

Since 1950, the number of urban residents has doubled across the world. In 2025, 45 percent of the world's population, or 3.69 billion people, lived in cities. Furthermore, the number of "megacities," cities with 10 million or more inhabitants, quadrupled from 1975 to 2025. This trend will likely continue: predictions claim that by 2050, two thirds of the global population will reside in urban regions.

This rapid urbanization has fueled calls for smart infrastructure—AI management of transportation and communication systems, for example—which in turn drives demand for computational infrastructure such as hyperscale data centers. These centers require large amounts of land and electricity, both of which are scarce and expensive in densely developed cities, encouraging firms to take their projects to peri-urban areas where space is more available and electricity networks are under less strain.

This dynamic appears in both the Global North and Global South. In India, major data-center developments have clustered in peripheral areas such as Noida and Navi Mumbai rather than central Delhi or Mumbai. In South Africa, chronic load-shedding due to power shortages in Johannesburg and Cape Town has redirected data-center investment toward surrounding municipalities with relatively more available capacity, such as Ekurhuleni and Tshwane. These locations provide access to land and power that dense urban cores can no longer supply.

Impacts on Peri-Urban and Urban Community Life

Data center construction distributes the costs of digital infrastructure across different communities. Hyperscale data centers consume enough electricity to power a small city, but local grids are usually built to serve households, farms, and small businesses, not an industrial facility. In Zeewolde, residents argued that a data center could divert electricity away from farms and local businesses, where electricity networks are under less obvious strain. For example, Meta's Zeewolde campus was projected to consume about 1,380 GWh of electricity per year, equivalent to the annual power use of 460,000 Dutch households.

Data centers also use water-based or evaporative cooling systems, which can consume millions of liters of water each day. At an industrial scale, a single 100-megawatt data center can use up to five million gallons of water daily, enough to meet the basic needs of a town of 10,000 to 50,000 residents. This demand for water is especially contentious in regions that already face water scarcity. In Chile, communities in and around Cerrillos, Santiago, argued that a proposed data center set to extract 7 billion liters annually—equivalent to the suburb's yearly domestic consumption—would overstress the city's central aquifer, exacerbating the region's 15-year megadrought.

Similar tensions are evident in major urban areas as well. In India, the government's "Digital India" project has accelerated the construction of data centers in rapidly developing cities such as Bangalore and Mumbai. In these cities, facilities consume approximately 7.38 million and 9.72 million liters of water per day, respectively, for cooling operations. In rapidly urbanizing cities where many households already ration water, this surge in industrial demand has intensified concerns that digital infrastructure is competing directly with basic domestic needs.

These cases point to a broader inequality in urban development that would ostensibly deepen in peri-urban contexts. For communities that host data centers, benefits such as tax revenue or jobs tend to be modest compared to the environmental and infrastructure burdens.

Toward More Equitable and Sustainable Development

Some governments are adopting measures for sustainable digital infrastructure in urban and peri-urban regions. One example is Germany's Federal Spatial Planning Act, or Raumordnungsgesetz (ROG), which was established in 1965 but later updated to address contemporary challenges arising from the expansion of smart infrastructure. ROG helps reconcile various land-use demands, such as housing, small businesses, and smart infrastructure including data centers. Furthermore, it protects agricultural areas on which large-scale development could encroach in the absence of such legal frameworks. ROG's goal is not to prevent smart infrastructure but to plan its logistics effectively, minimizing environmental costs that would otherwise afflict peri-urban populations.

Other countries have turned to incentive structures that link corporate investment to the public good. Ireland offers a prominent example. After years of rapid hyperscale expansion, national regulators introduced a capacity-based approval system: new data centers must now demonstrate contributions to decarbonization, grid stability, or regional employment before receiving access to electricity connections. This framework helps shift perceptions—data centers are treated not simply as large energy consumers but as actors responsible for supporting broader sustainability objectives. A comparable logic has shaped policy in Singapore, where a temporary moratorium on new data centers was lifted only after firms agreed to meet strict energy-efficiency and climate benchmarks.

Governance reforms also increasingly emphasize the participation of peri-urban regions. In Denmark, public consultations for hyperscale developments include mandatory environmental impact hearings and negotiations over community benefits. These processes give residents a formal role in shaping project outcomes. In Kenya, civil society organizations such as Kenya Land Alliance have pushed for stronger land-rights protections in areas undergoing digital expansion to ensure that local communities have legal standing in land-allocation decisions. Community participation serves as a way to rebalance power between global firms and peri-urban digital infrastructure hosts.

As these cases reveal, more deliberate, democratic governance offers a path toward digital expansion that supports urban growth without transferring its costs disproportionately onto peri-urban communities.

Conclusion

Data centers are essential to contemporary urban development, yet their rapid proliferation places disproportionate burdens on surrounding communities. Addressing these challenges calls for coordinating planning across regions and protecting shared land, water, and energy resources. Through considered governance and community participation, the expansion of smart infrastructure can support the goals of sustainable urbanization at multiple stages of development.