A study published Tuesday by First Street, a climate risk analytics firm, found that nearly 80% of the world’s datacenters are exposed to extreme climate hazards such as flooding, wildfires and severe winds. The report examined 97 global datacenter markets and concluded that the infrastructure underpinning the digital economy faces acute operational threats as the climate shifts.
The study assessed both acute risks — single extreme events — and chronic risks such as rising heat and prolonged drought. It found that chronic factors alone affect 54% of datacenter markets worldwide, disrupting operations and driving up insurance costs.
“Where you build a data center determines a large share of what it will cost to run for the next 20 or 30 years,” Jeremy Porter, chief economist at First Street, said in a press release. “Climate is a big part of that: cooling, water, and reliability all depend on location. But most valuations still focus on growth and treat climate as a secondary concern.”
The Americas emerged as the region most exposed to acute hazards, with 86% of datacenter capacity located in markets with elevated risk from flood, wind and wildfire. That compares with 60% in the Asia-Pacific region and 25% in Europe, the Middle East and Africa, Porter told the Guardian.
Asia-Pacific, however, leads in chronic risk exposure: 89% of its datacenters face heightened vulnerability to extreme heat and drought, Porter said. About 50% of U.S. datacenters and 46% of those in Europe, the Middle East and Africa face similar chronic threats.
In the United States, the Carolinas, Atlanta, the New York-New Jersey region and northern Virginia — one of the fastest-growing datacenter hubs globally — rank among the 10 most exposed markets to both acute and chronic hazards. Other rapidly expanding markets including Johor, Malaysia, and Marseille, France, also appear on the most-vulnerable list. By contrast, lower-risk regions such as Helsinki, Finland, have seen much slower datacenter buildout.
“In other words, scale is being built where operating conditions are hardest, not where they’re easiest,” the report states.
Matthew Eby, founder and CEO of First Street, said the industry’s risk models have not kept pace with a changing climate. “Most underwriting for real assets still uses historical data, but the climate is no longer behaving the way the historical record would predict,” Eby said in the release. “As heat, drought, and water stress increase, outdated models simply don’t offer a complete view of risk anymore.”
The report is the latest in a series of warnings about the vulnerability of datacenter infrastructure. A previous Guardian investigation found that about two-thirds of upcoming U.S. datacenters are slated for construction in drought-prone areas. In March, Swiss Re, a Swiss reinsurance company, reported that new datacenters globally are increasingly being placed in zones prone to hail and tornado activity.
Porter warned that climate-driven disruptions to datacenters do not stay isolated. “Datacenters run the digital services people and businesses rely on,” he said. “So a climate hit to a local datacenter can radiate outward as a service disruption, on top of competing with that same community for power and water in regions already under stress.”