A while ago at the beginning of the semester we talked about externalities. Externalities are a cost or benefit that affects a third party who is not directly involved in an economic activity. More recently in class we have talked about the usage of AI platforms such as Chat GPT, and how they so positively impact our everyday lives. However, there is a cost to using AI like Chat GPT that often goes overlooked - the environmental impact.
There is a negative externality in production associated with the provision of AI tools that is accelerating the loss of our scarcest natural resource: water. Companies that provide these AI tools have drastically increased their water usage over the past few years as their technological reach has expanded. The massive water consumption stems from a need to maintain optimal temperatures for densely packed servers and computing hardware racks so as to not overheat these components crucial to providing the technology used in AI.
While there are currently no comprehensive regulations targeting this water usage, there are a few public-choice backed ways regulation could be implemented.
A tax on water usage past a certain level (though this does not incentivize corporations to innovate)
A market for permits for additional water past the permitted level
Or, as Coppock once said “Shut the bastards down”
1 comment:
Hey Heidi, I think you make a really interesting point here about how we can incentivize these companies to reduce their water usage. I agree with your ideas, but I want to bring up another idea I think should be considered here. Different states have very differing levels of concern over their water levels, as shown in these graphs: https://www.climate.gov/news-features/featured-images/us-drought-vulnerability-rankings-are-how-does-your-state-compare (the link doesn't seem to populate correctly on comments but it can be copy and pasted). Although water can to some extent be transported, the costs of this make it more likely that water will be from some local source. With this in mind, we would want to think about keeping these companies from operating in areas where water is already scarce. Although it would seem that the scarcity of water would be perfectly represented in the price, this is not always the case as water rights arguments between states can lead to water availability being more political then geographic. From this I provide one more potential solution: a regional tax rate on water usage by tech firms based on the respective drought rate. This way if a company is going to use large quantities of water in their process, we can at least hope they avoid California (who has been struggling with severe drought) where they may otherwise want to operate.
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