Fires Cost at Least $364 Million in São Paulo; Drought Expected to Worsen Losses in Brazil

Billion-dollar losses may only be the beginning of the consequences of the drought and the spread of wildfires in Brazil. The intensification of the climate crisis in recent weeks is putting pressure on basic services like energy and water supply and reinforcing warnings about the potential long-term economic impacts of extreme events, according to specialists consulted by . In the state of Sao Paulo, losses in agriculture from the fires were nearing R$2 billion ($ 364 million), according to an updated report on Thursday (12) by the State Department of Agriculture and Supply. There are impacts on cattle farming, dairy production, sugarcane, fruits, honey and derivatives, cellulose, and latex extraction activities. The state government said it has made R$110 million ($ 20 million) available for actions aimed at affected producers. Estimating the losses from an ongoing crisis is difficult, analysts say, as the effects are not fully known yet. For Sergio Vale, chief economist at MB Associates, the current situation highlights the need for significant changes in the economy in the long term. "The world needs more concrete actions to avoid catastrophic scenarios in the coming years. In Brazil's case, the climate issue affecting agriculture is the biggest concern [economically]. It will require irrigation projects and insurance. And rural insurance is still underdeveloped in Brazil," he says. The economist notes that, due to the offseason, crops like soybeans and corn, which dominate Brazilian agriculture, have not yet been significantly impacted by the fires. The main worry is if the water shortage extends over the coming months, affecting the summer planting of these and other crops.