The locale of a story should affect character design in how that character interacts with the setting or how this individual has been shaped by the place.
Setting isn’t separate from your other story elements. It’s not just a piece of scenery relegated to the background. Instead, it should be an inherent part of the situation and plot problem. After all, if your characters seem oblivious to their location, why did you choose it? Why not let it instead work for you and the needs of your story?
By all of this, I don’t mean you have to inject a raging typhoon into your plot scenario, but if–for example–you strand your characters in a life raft bobbing on the Pacific Ocean, what individual impact does that setting have on each of them?
Is your protagonist comfortable with the backdrop you’ve chosen? Is this person an intrinsic part of the locale? Does the hero know the lay of the land or the city streets? Is he or she prepared to handle things? Can this individual stay calm and competent in dealing with trouble? Will it be possible to maneuver without becoming lost? If so, then you as the writer will be plotting externally. Complications and story problems will be generated by other characters with whom the hero is in conflict.
On the other hand, if your protagonist is a fish out of water, then that person’s unfamiliarity with the setting can inject additional danger, misunderstandings, or even comedy into your story beyond what oppositional characters will bring. It enables you to present setting details to readers as your hero discovers them. This process of ongoing discovery and observation can allow you to avoid awkward information dumps that might otherwise stall story progress.
As an example, let’s consider the vintage film, Crocodile Dundee. It begins in the Australian outback, where civilization is basic and the setting is full of natural dangers. Dundee is an intrinsic part of the setting. He’s comfortable with poisonous snakes and vicious crocodiles. He knows how to survive in the brush. The girl, however, is a fish out of water. She’s in physical danger constantly because she doesn’t know the pitfalls to watch for and avoid. Halfway through the film, however, the setting shifts to New York City. Now the girl is comfortable with her urban setting, but Dundee becomes the fish out of water. His bewilderment and subsequent solutions inject comedy into the story. I might add that he adapts very quickly to his new environment–thus characterizing himself further.
Let’s also think about how a character is shaped by the place where she grew up. Let’s say she was kept isolated from others, home schooled, and lived on a remote sheep ranch in New Zealand. Those factors will affect in turn her personality, behavior, and reactions. She may be very self-reliant, independent, and resourceful. She may feel uneasy in social situations, avoid parties or crowds of people, and be a difficult co-worker. Conversely, she may move to the other extreme by seeking city life and parties. She may be a profligate spender to compensate for all the things she thinks she missed while growing up.
Children of military parents learn they’ll be uprooted every year or two. They aren’t going to form deep, close-knit friendships at school, but they may become gregarious and socialized enough to make friends anywhere. They can become highly adaptable people, or they may hate the constant moving and never feel like they belong.
If a character currently lives in a harsh desert climate, then does he ignore his environment by planting a lush lawn similar to what he knew in a different part of the world and irrigating it? Does he run an air conditioner lavishly? Or does he work with his setting by staying indoors during the hottest part of the day, never driving anywhere without a thermos of water, closing the house during the day and opening all the windows at night when the air is cooler, and foregoing a lawn? Such details alone don’t make a story, but if–for example–the plot deals with a runaway senior citizen suffering from dementia who has wandered into the brush away from all roads, then a desert-savvy protagonist will know to start the search at dawn, to find tracks in the sand and follow them, to carry plenty of water and a weapon in case he encounters rabid wildlife, and that he must find Granny before the intense noonday heat gives her sunstroke or she becomes dangerously dehydrated. The search alone is pitting man against the adversity of nature. Adversity alone doesn’t make a compelling novel. But if you add the brother that typically ignores desert conditions as stated above but who insists on joining the search, now your story can run on the conflict between brothers as one grimly notes how time is running out while the other complains constantly, slows down the hunt by doing the wrong things, and drinks all the water in their canteens.