The wider economic impact of severe drought in Czechia could reach CZK 30–50 billion, according to estimates presented by the Czech Insurance Association (ČAP). The association warns that the true cost of drought extends far beyond direct agricultural and forestry losses, affecting supply chains, investment, productivity and the environment.

According to ČAP, the severe drought of 2018 generated direct losses estimated by the Ministry of Agriculture at CZK 24 billion. However, when indirect economic effects, reduced investment and long-term environmental damage are considered, total losses may have reached CZK 30–50 billion. A similarly severe drought in 2026 could generate comparable losses, expressed in current prices.

The association's economic model estimates indirect losses to related industries and supply chains at CZK 4–10 billion, while longer-term effects on investment and productivity could add another CZK 2–7 billion. Environmental damage represents an additional cost that is difficult to quantify.

Jan Matoušek, Executive Director of ČAP, emphasized that insurance payouts cover only the insured portion of losses, while the broader economic consequences are borne by society as a whole.

The association therefore calls for greater investment in drought prevention, water retention, irrigation infrastructure and forest resilience. It also highlights the insurance industry's contribution through claims data and risk expertise, which can help identify vulnerabilities and support more effective prevention measures.

ČAP stresses that the cost of prevention should be assessed against the full economic impact of drought, rather than insured losses alone, as the long-term consequences may substantially exceed immediate damage.