Nearly 80% of Global Data Center Capacity Faces Elevated Climate Risk, Study Finds

A new study released Thursday finds that 79% of all data center capacity worldwide is exposed to acute risk from severe climate-induced events, raising concerns about the long-term durability of infrastructure underpinning the global technology economy.

The report, published by First Street, a climate risk analytics firm, examined 97 global data center markets. Acute hazards identified in the study include flooding, extreme winds, and wildfires — all of which can disrupt operations, increase downtime, and drive up insurance and repair costs.

Just over half of all data centers globally are also situated in markets exposed to chronic climate stress, such as extreme heat and drought, which erode energy efficiency and add to operating costs over time.

"Most underwriting for real assets still uses historical data, but the climate is no longer behaving the way the historical record would predict," First Street CEO Matthew Eby said in a statement. "As heat, drought, and water stress increase, outdated models simply don't offer a complete view of risk anymore."

Jeremy Porter, chief economist at First Street, echoed that concern, pointing specifically to government flood models he described as outdated because they rely on historical precipitation levels without accounting for climate change. As the Earth warms, clouds retain more moisture and rainfall becomes heavier — a dynamic those models do not capture.

"Ultimately, it's just something that we're underestimating," Porter said.

The Asia-Pacific region carries the heaviest exposure, with 89% of its data center capacity at elevated acute risk — the highest share of any geographic area examined in the study. By comparison, 50% of capacity in the Americas and 46% in Europe, the Middle East, and Africa face similar exposure. Nordic markets registered the lowest climate risk of any region surveyed.

Among the most exposed individual markets are some of the industry's fastest-growing: Northern Virginia in the United States, Johor in Malaysia, and Marseille, France.

"The top 10 markets with acute climate risk across the globe, most of them are in the U.S. Most of them have wind and flood risk," Porter said, adding that the U.S. faces comparatively less chronic climate stress than other regions.

Data centers are typically built to operate for 20 to 30 years, a time horizon that the study's authors argue makes forward-looking climate risk assessment essential — and currently underused. Investors, the report warns, may be relying on traditional development metrics that do not adequately reflect how changing climate conditions could affect long-term operating environments.

"Investors who incorporate these factors into underwriting and capital allocation decisions will be better positioned to identify resilient markets and avoid mispriced risk," Eby said.

Some operators are already responding. Digital Realty CEO Andrew Power noted earlier this year that the company's portfolio of roughly 300 data centers globally has largely transitioned to waterless or closed-loop cooling systems to reduce water dependency. "So think of it as there's no evaporation. We make the investments and elect to do that," Power said.

Porter drew a distinction between physical building hardening — which he said can address acute climate risks reasonably well — and the broader systemic vulnerabilities that are harder to solve at the site level. Those include power grid access, road egress, and surrounding community infrastructure.

"There is a building mitigation process, but then there's a community mitigation process," he said, urging developers to move beyond parcel-specific risk analysis toward a systems-level view.

As AI workloads drive a rapid expansion of data center construction globally, the First Street findings underscore a growing tension between the pace of that build-out and the adequacy of the risk frameworks guiding where and how that infrastructure is deployed.