The world's data centers are facing a climate crisis that could have severe consequences for the global economy. A recent study by climate-risk firm First Street reveals that nearly 80% of global data center capacity is vulnerable to short-term climate shocks such as floods, high winds, and wildfires, which can disrupt operations and increase repair and insurance costs. Moreover, over half of these data centers are also exposed to longer-term climate risks like extreme heat and drought, which can significantly impact their efficiency and operational expenses over their 20- to 30-year lifespan.
What makes this situation particularly alarming is the outdated reliance on historical weather data by insurers and investors. As First Street CEO Matthew Eby points out, the climate is no longer predictable based on historical records. The increasing heat, drought, and water stress mean that traditional models fail to accurately assess the full range of risks. This is especially critical when considering the interconnected nature of infrastructure. As First Street chief economist Jeremy Porter explains, even well-fortified data centers can be rendered inoperable if the surrounding roads, grid connections, and other critical infrastructure are compromised.
The Asia-Pacific region bears the brunt of this climate risk, with nearly 90% of data center capacity at risk. In contrast, the Nordic countries, which are often considered the most resilient, have the lowest exposure to climate hazards. Interestingly, some of the fastest-growing data center markets, such as Northern Virginia, Johor in Malaysia, and Marseille, France, are also among the most vulnerable. This paradox highlights the complex interplay between economic growth and environmental risk.
This study underscores the urgent need for data centers to adapt to the changing climate. It also highlights the importance of accurate risk assessment and the potential for significant economic disruption if these risks are not adequately addressed. As the world becomes increasingly reliant on data centers for critical infrastructure and services, the need for climate-resilient solutions has never been more pressing.
