A new analysis has found that a significant share of the world’s largest data centers are exposed to climate-related risks, including flooding, extreme heat, wildfires, and drought.
The study, conducted and published by climate risk modeling firm First Street, said these facilities are located in areas vulnerable to climate hazards, raising concerns over long-term investment performance and operational stability.
The report, titled Climate Risk in Global Data Center Markets: Implications for Investment and Performance, examined 97 global data center markets and found that a majority are situated in high-risk climate zones.
First Street said 79% of global data center capacity is located in areas exposed to elevated climate hazards, even as demand for cloud computing and artificial intelligence infrastructure continues to rise.
“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 reported by CNBC. “As heat, drought, and water stress increase, outdated models simply don’t offer a complete view of risk anymore.”
The firm further noted that despite surging demand for digital infrastructure, operators continue to build in locations exposed to environmental risks, largely due to constraints such as power availability, land costs, and regulatory requirements.
First Street chief economist Jeremy Porter told CNBC that government models used to assess climate risk are outdated and increasingly inadequate in capturing emerging threats.
“Ultimately, it’s just something that we’re underestimating,” he said.
The study also warned that investors may still rely on traditional development models for data centers without fully accounting for climate-related risks, posing potential risks to infrastructure planning and financing.
“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 added in comments to CNBC.
