Full Breakdown
Global Data Centers Face Widespread Climate Hazards, New Study Shows
6/19/2026, 12:26:55 AM
Core Findings on Climate Exposure
First Street’s analysis of 97 data-center markets worldwide reveals that 79 % of global data-center capacity is situated in locations vulnerable to acute climate hazards—flooding, extreme winds and wildfires. In addition, 54 % of capacity resides in markets exposed to chronic stressors such as extreme heat and drought, which raise cooling costs and reduce operational efficiency. The study emphasizes that these risks affect facilities expected to operate for 20-30 years.
Context: Data-Center Growth and Traditional Risk Assessment
The sector’s capacity has expanded rapidly over the past decade and is projected to nearly double by 2030. Historically, investors have prioritized power availability, connectivity, land access and demand growth, while underwriting models have relied on historical weather data. First Street argues that such backward-looking approaches no longer capture the evolving climate reality.
Key Players and Their Perspectives
- First Street – Climate-risk analytics firm conducting the study.
- Matthew Eby – Founder and CEO of First Street, who highlights the inadequacy of legacy underwriting.
- Jeremy Porter – Chief Economist at First Street, who stresses the operational implications of location-specific climate factors.
Quantitative Exposure Across Regions
- Asia-Pacific: 89 % (reported as “almost 90 %”) of capacity faces acute hazards.
- Americas: Approximately 50 % of capacity is at risk.
- Europe, Middle East & Africa (EMEA): 46 % of capacity exposed.
High-growth hubs—Northern Virginia (U.S.), Johor (Malaysia) and Marseille (France)—rank among the most exposed markets, whereas Nordic locations exhibit the lowest exposure levels.
Implications for Investment and Operations
The identified hazards can trigger operational downtime, elevate insurance premiums, and increase energy consumption for cooling. First Street warns that investors who fail to integrate climate risk into underwriting may misprice assets and overlook long-term vulnerabilities. Incorporating climate-adjusted models could help identify resilient markets and improve capital-allocation decisions.
Official Statements & Responses
Matthew Eby noted that most real-asset underwriting still depends on historical data, which no longer reflects current climate dynamics, and that rising heat, drought and water stress render outdated models incomplete. Jeremy Porter added that cooling, water use and reliability are heavily location-dependent, yet many valuations continue to prioritize growth over climate considerations. Both executives advocate for climate-informed underwriting to better align risk assessment with projected operating conditions.
Criticism of Conventional Underwriting Practices
First Street criticizes insurers and investors for persisting with historical-data-centric models, arguing that such practices underestimate both acute and chronic climate threats. The firm contends that without accounting for changing precipitation patterns and intensified weather events, asset valuations remain vulnerable to mispricing.
Conflicting Figures & Data Gaps
Sources differ slightly on regional exposure: APAC risk is cited as 89 % in one report and “almost 90 %” in another; the Americas figure is described as “around 50 %” while EMEA is listed as 46 % in a separate source. No independent verification of the underlying climate-risk models is provided, and mitigation strategies beyond location selection are not detailed.
Verbatim Quotes
- “ “Most underwriting for real assets still uses historical data, but the climate is no longer behaving the way the historical record would predict.” — Matthew Eby, Founder and CEO, First Street
- “As heat, drought, and water stress increase, outdated models simply don't offer a complete view of risk anymore.” — Matthew Eby, Founder and CEO, First Street
- “Ultimately, it's just something that we're underestimating,” — Jeremy Porter, Chief Economist, First Street
- “There is a building mitigation process, but then there's a community mitigation process,” — Jeremy Porter, Chief Economist, First Street
- “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, First Street
What’s Next for Climate-Aware Data-Center Planning
First Street’s full report is publicly available, and the firm expects its climate-risk models to inform upcoming investment decisions and insurance underwriting practices. Industry stakeholders are likely to monitor how climate-adjusted metrics influence site selection, financing terms and regulatory guidance in the coming years.
