Background The Drought Code (DC) of the Canadian Fire Weather Index System (CFWIS) has been intuitively regarded by fire managers in Alaska, USA, as poorly representing the moisture content in the forest floor in lowland taiga forests on permafrost soils. Aims The aim of this study was to evaluate the DC using its own framework of water balance as cumulative additions of daily precipitation and substractions of actual evaporation. Methods We used eddy covariance measurements (EC) from three flux towers in Interior Alaska as a benchmark of natural evaporation. Key results The DC water balance model overpredicted drought for all 14 site-years that we analysed. Errors in water balance cumulated to 109 mm by the end of the season, which was 54% of the soil water storage capacity of the DC model. Median daily water balance was 6.3 times lower than that measured by EC. Conclusions About half the error in the model was due to correction of precipitation for canopy effects. The other half was due to dependence of the actual evaporation rate on the proportional ‘fullness’ of soil water storage in the DC model. Implications Fire danger situational awareness is improved by ignoring the DC in the CFWIS for boreal forests occurring on permafrost.