Indonesia's Fire and Haze Crisis

November 25, 2015

Indonesia is facing an environmental disaster. Fires from drained peatlands have caused massive air pollution, or 'haze', causing respiratory and other illnesses. The disruption in economic activities has cost the country $16 billion in losses. Stopping the haze requires a commitment to sustainable management of forests and peatlands.

World Bank Group

Indonesia’s fire and haze crisis this year has been described by many in the international community as an environmental disaster. Large parts of the country’s forests and land area have burned out of control since August 2015, impacting the health, education and livelihoods of millions of Indonesians living in the areas with the worst burning. This has also resulted in billions of dollars’ worth of damages and losses.  



Forest fires become a problem every year during the annual dry season, when fires are lit to clear and/or prepare land for agriculture.  The smoke from the fires creates massive air pollution -- commonly referred to as “haze” -- across Indonesia and neighboring countries Malaysia and Singapore. Fires occur throughout Indonesia and on all types of soils, but fires on peatlands are of particular concern as they cause up to 90% of the haze, releasing three to six times more particulate matter than fires on other types of soil. Peatlands are concentrated in lowland areas of Sumatra, Kalimantan and Papua, where the worst impacts of the fires and haze have been felt.



Extreme weather conditions caused by El Niño, which increases ocean temperatures in the Southern Ocean, are expected in 2015.  In Indonesia, El Niño has delayed the monsoon rains, leading to drought across the country, impacting water supplies and harvests of rice and other crops.  Under these extremely dry conditions, Indonesia’s forests and peatlands, become tinderboxes.  The rainy season, already late, is expected to be shorter than usual due to El Niño. Taking into account previous years when the phenomenon took place, serious fires are likely to be a problem again in early 2016. 



Peat swamp forests are tropical ecosystems where saturated soils or frequent flooding prevents dead leaves and wood from fully decomposing. As this organic material slowly accumulates, it retains more water, becoming a giant sponge that holds in the moisture.  Peat swamps eventually form a dome of wet organic material or “peat”. The most vulnerable “deep peat” areas are over 4 meters (13 feet) deep, with depths of up to 20 meters (65 feet) in some places.  As long as peat remains wet, it cannot burn.  However, when peatlands are drained in order to convert the land for agricultural production, they become susceptible to fire.  Once fire starts on peat, it is difficult to extinguish due to its depth and it can smolder under the surface for months. 



Fires and the resulting haze have caused Indonesia and neighboring countries significant economic, social and environmental costs.  The full extent of these costs and the long-term impacts are not yet known.  The World Bank is helping to assess the costs of the fires and haze in a variety of sectors.  



Early estimates of the total economic costs of the fires in 2015 in Indonesia alone exceed US $16 billion.  This is more than double the damage and losses from the 2004 tsunami (which affected provinces in Indonesia and other countries), and equal to about 1.8% of Indonesia’s Gross Domestic Product (GDP).  This estimate includes losses to agriculture, forestry, transport, trade, industry, tourism, and other sectors.  Some of these costs are direct damage and losses to crops, forests, houses and infrastructure, as well as the cost of responding to the fires.

Many of the economic losses result from the disruption of air, land and sea travel due to the haze.  These damages and losses  are expected to have serious impact on the economic growth rate of affected provinces and the government’s efforts to reduce poverty in the hardest-hit regions, such as Central Kalimantan.



Air quality during high burning periods in villages near the fires regularly exceed the maximum level of 1000 on the international Pollutant Standard Index (PSI) – this is more than three times the amount considered “hazardous.” The toxic smoke causes widespread respiratory, eye, and skin ailments and is especially hazardous for the very young and the elderly; the toxic air they breathe include carbon dioxide, cyanide, and ammonium.  The long-term health impacts are not yet known but are expected to be highly significant.  

Businesses and schools across the region close due to the haze, crippling many low-income families and prompting them to fall back into poverty. Approximately 5 million students have been impacted by school closures in 2015. 



More than 2.6 million hectares of forest, peat, and other land have burned in 2015 -- an area 4.5 times the size of Bali. Burned peat areas can be restored, but short-term impact include the  loss of timber and non-timber forest products, and the loss of habitat for pollinators, wildlife, and grazing lands. While not yet fully analyzed, the costs related to biodiversity may exceed US $295 million for 2015. The long-term impact on wildlife and biodiversity is also not fully known, but thousands of hectares of habitat for orangutans and other endangered species have been destroyed.


In terms of global impact, forest and peat fires are a major source of greenhouse gas (GHG) emissions.  Daily emissions from Indonesia’s fires in October 2015 exceeded the emissions from the entire US economy – that is more than 15.95 million tons of CO2 emissions per day.  If Indonesia could stop the fires it would meet its stated target to reduce GHG emissions by 29% by the year 2030.



There is no short-term solution to Indonesia’s fire and haze problem. To solve it, Indonesia will need to find a new way of managing forests and peatlands and create an improved system of fire management with a greater focus on prevention.  That will require addressing weak land tenure security, and strengthening governance and accountability -- particularly around policies, regulations and systems for land access and management. 

Indonesia can draw on international examples of successful efforts to restore severely degraded landscapes, such as the successful rehabilitation of the Loess Plateau in China, the Great Rift Valley in Ethiopia, or the silvopastoral management programin Colombia. Indonesia can also draw lessons learned on fire management from Thailand and South Africa.

The Government of Indonesia has announced that it is taking strong steps towards a long-term solution, through:

  1. A moratorium to halt drainage and development on peatland.
  2. An ambitious program to restore degraded peatlands.
  3. A more prevention-focused approach to managing fire. 

The international community stands ready to assist in these efforts.