Data Centers Have A Climate-Risk Problem. The Map Is Uneven.

Climate Exposure Moves Into The Data Center Ledger

A First Street study released Thursday puts 79% of global data center capacity in markets with elevated exposure to acute climate hazards.

The hazards include flooding, extreme winds and wildfires, each capable of interrupting operations, increasing downtime and raising insurance or repair costs.

The climate-risk analytics firm examined 97 global data center markets.

Its conclusion is a warning for a sector that is expanding around AI demand, cloud services and enterprise computing: location risk is no longer only a question of land, tax incentives, fibre routes or power price.

First Street CEO Matthew Eby said most real-asset underwriting still relies on historical data even though climate conditions have changed.

His point narrows the issue for data center investors.

A site can look attractive under older models while carrying exposure that shows up later through weather disruption, water stress, cooling costs or power-system fragility.

Acute Events Are Only Part Of The Exposure

The study separates sudden climate shocks from slower operating pressure.

Just over half of all data centers globally sit in markets exposed to chronic climate stress such as extreme heat and drought.

Those stresses can reduce energy efficiency and lift costs even without a single catastrophic event.

Jeremy Porter, First Street's chief economist, said backward-looking models miss climate-adjusted sources of risk.

He pointed to precipitation models that rely on past rainfall patterns even as a warmer atmosphere holds more moisture and produces heavier rainfall.

That changes the diligence question for developers and investors.

Data centers are typically expected to operate for 20 to 30 years, so a project underwritten around today's utility, cooling and insurance assumptions may face a different risk profile over its operating life.

Cooling Choices Show The Adaptation Problem

Some operators are already designing around resource constraints.

Digital Realty CEO Andrew Power said earlier this year that almost all of the company's 300 data centers use either waterless systems or closed-loop water systems.

He described those systems as avoiding evaporation after the company chooses to make the investment.

That example shows why climate adaptation is not only about stronger walls or roofs.

Building envelopes can reduce damage from severe weather, but Porter said the more important question is how the facility connects to external systems: infrastructure, access routes, power access and the surrounding community.

For a data center, a hardened building is not enough if power delivery, roads, emergency access or local water availability become the weak point.

The study pushes resilience planning beyond the parcel and into the network of services that keeps compute capacity online.

Asia-Pacific Carries The Highest Regional Share

The regional split is uneven.

First Street found that Asia-Pacific has 89% of its data center capacity at risk, the highest share among the regions measured.

The Americas were listed at 50%, while Europe, the Middle East and Africa stood at 46%.

The study also identified several fast-growing markets as exposed, including Northern Virginia in the U.S., Johor in Malaysia and Marseille in France.

Nordic markets had the lowest climate risk.

For AI infrastructure buyers, the finding does not say those markets will fail.

It does say that compute location, cooling design, power reliability, insurance assumptions and community-level infrastructure now belong in the same investment review.

The next useful evidence will be project-level disclosure: which operators show resilience spending, power-access planning and water strategy before capacity is sold.