The cloud may be metaphorical, but the climate risks to it are not. A new analysis by climate-risk firm First Street finds nearly 80% of global data center capacity sits in locations vulnerable to short-term climate shocks like floods, high winds, and wildfires—threats that can knock facilities offline and drive up repair and insurance costs, CNBC reports. More than half of data centers also face longer-term stresses such as extreme heat and drought, which can drag on efficiency and expenses over the 20- to 30-year life of a facility.
First Street criticizes insurers and investors for relying on historical weather data that no longer reflects the reality of the changing climate. "The climate is no longer behaving the way the historical record would predict," says First Street CEO Matthew Eby. "As heat, drought, and water stress increase, outdated models simply don't offer a complete view of risk anymore." First Street chief economist Jeremy Porter warns that even when structures are fortified against extreme weather, they can be rendered inoperable if roads, grid connections, and other surrounding infrastructure are hit, Quartz reports. "There is a building mitigation process, but then there's a community mitigation process," he says.
Asia-Pacific has the highest exposure, with almost 90% of data center capacity at risk to climate hazards. In the US and Europe, the figure is around 50%. Some of the sector's hottest growth markets, including Northern Virginia, Johor in Malaysia, and Marseille, France, are among the most at risk, while the risk is lowest in Nordic countries.
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