Southeast Asia's haze problem is not just the weather

THE COMPETING title treats hot weather and fire risk as the main story. The deeper question is why Southeast Asia keeps turning climate disasters into diplomatic theatre rather than solving a problem it has known about for half a century. The weather forecast is the trigger. The structural failure is the fuel.

A strengthening El Niño - informally dubbed "Godzilla" by some meteorologists - is making hot, dry conditions across Southeast Asia virtually inevitable for the rest of 2026. NOAA, America's ocean and atmosphere agency, confirmed in June that warming conditions were taking hold in the equatorial Pacific and gave a 63% chance of sea-surface temperatures exceeding 2°C above normal later this year. That would place this event among the strongest El Niños on record. The ASEAN Specialized Meteorological Centre, based in Singapore, has raised its transboundary haze alert for parts of Indonesia. A warning issued in early July covered Brunei, Indonesia, Malaysia and Singapore, with August and September identified as the most dangerous period.

The immediate mechanism is simple. El Niño disrupts the wind patterns that normally carry moisture from the Pacific to Southeast Asia. Monsoon rains arrive late, are weaker, or fail altogether. Reservoirs drop. Crops wither. And peatlands - the carbon-rich swamp soils that underlie much of Indonesia, Malaysia and parts of Borneo - dry out. Once drained for palm oil and pulpwood plantations, they become highly flammable. Peat fires burn underground, smouldering for weeks or months, and are extraordinarily difficult to extinguish.

The region is not starting from zero. More than 5,000 fire hotspots were detected across Indonesia's peatlands in January this year, despite it being the rainy season. That is an early signal of how degraded these ecosystems have become. The Copernicus Atmosphere Monitoring Service reported in May that severe haze already affected large parts of Southeast Asia during spring 2026, with Thailand recording its highest seasonal fire emissions in a decade. PM2.5 concentrations - fine particulate matter small enough to penetrate the lungs and enter the bloodstream - regularly exceeded the World Health Organisation's 24-hour guideline of 15 micrograms per cubic metre by orders of magnitude, reaching above 100 µg/m³ in several days and peaking at 360 µg/m³ in parts of Thailand.

Yet the fire and haze story, although visually dramatic, is only the most visible consequence. The economic damage runs wider.

Southeast Asia's agricultural sector is concentrated in two commodities - rice and palm oil - both of which are uniquely sensitive to climate shocks, as Jason Lee, chair of the Global Heat Health Information Network's Southeast Asia Hub, has warned. Paul Teng, a visiting senior fellow at the ISEAS–Yusof Ishak Institute, estimates a 2%–8% reduction in regional rice output compared with a normal year, with the heaviest losses in Thailand, the Philippines, Indonesia and Cambodia. Palm oil, for which Indonesia and Malaysia produce roughly 85% of world supply, is also sensitive to heat stress, though the impact will lag by six to twelve months as reduced fruit formation percolates through the harvest cycle.

That matters because Southeast Asia is already feeling the cost of higher energy and fertiliser prices driven by the war in Iran. Goldman Sachs, a bank, forecasts that the El Niño's full effect could push global food commodity prices up by 15.8%, with consequences lasting into 2028. The bank expects Singapore and the Philippines - net food importers - to absorb the sharpest shock. UniCredit analysts warn that "climateflation" is back on the agenda, forcing central banks to keep interest rates elevated at precisely the moment that businesses face higher borrowing costs and governments are subsidising food and fuel.

Inflation is already above target in the Philippines at 6.8% and has risen to 5.6% in Vietnam. The Asian Development Bank cut its 2026 growth forecast for developing Asia from 5.1% to 4.7%, partly blaming the Iran war and partly the weather. The El Niño adds a second blow to an economy that was already on the ropes.

To be sure, El Niño is a natural cycle, not a policy failure. It has always brought heat and drought to Southeast Asia. The devastating 1997–98 event burned some 9–10 million hectares across Indonesia, blanketed more than 200 million people in toxic haze, and was followed by severe crop failures. The recent El Niño of 2023–24 was itself among the five strongest on record, and it contributed to record global temperatures in 2024. This time will not be the first.

But it will be different in a way that is harder to forgive. The region's peatlands have been systematically degraded. Indonesia holds around 13.4 million hectares of tropical peatland - roughly 40% of the world's total. Between four and six million of those hectares have been drained and converted, according to Wetlands International, an advocacy group that published a white paper on the subject last week. Healthy peatlands are naturally fire-resistant because they stay waterlogged. Drained ones are tinder. The fires of 2026 will be partly nature's fault. They will also be the product of decades of land-use decisions that traded long-term resilience for short-term plantation revenue.

That brings the argument to the institutional level. Southeast Asia has a transboundary haze agreement. It was reaffirmed in 2019 with a pledge for haze-free skies by 2030. It has not been enforced. ASEAN's structure makes enforcement difficult - the organisation is built on consensus and non-interference, principles that are useful for avoiding quarrels but useless for solving shared environmental problems. When the haze returned in 2023, Indonesia's environment minister flatly denied that smoke was reaching Malaysia, repeating a pattern of diplomatic denial that dates back to a 2015 gaffe by then vice-president Jusuf Kalla, who told complaining neighbours: "For 11 months, they enjoyed nice air from Indonesia and they never thanked us."

The incentive structure makes the politics worse. Governments are reluctant to restrict plantation burning aggressively when farmers and agribusinesses are already squeezed by higher input costs. Helena Varkkey, an associate professor of political ecology at Universiti Malaya, puts it plainly: haze is a test of regional diplomacy that the region consistently fails.

The solution space is not empty. Wetlands International's white paper is explicit that a major fire crisis is not inevitable. Restoring water levels in drained peatlands, repairing rewetting infrastructure, and strengthening early-warning systems would reduce fire risk significantly. Paludiculture - growing crops on wet, rather than drained, peatland - exists and is technically feasible. The UN Environment Programme has called peatlands one of the "quickest wins" in the fight against climate change, because they store vast amounts of carbon and regulate water.

But these measures require coordination that ASEAN has not yet demonstrated it can deliver. They also require companies with an interest in drained peatland to accept lower short-term yields. The incentive misalignment is structural.

The broader lesson for investors and policymakers alike is that Southeast Asia's vulnerability is not purely meteorological. It is institutional. The region's dependence on rain-fed agriculture, its concentration in two climate-sensitive commodities, and its failure to enforce regional environmental agreements create a feedback loop: climate stress raises food prices, which strain government budgets, which reduces the political capital available for the very investments that would reduce future risk.

Better to invest in peatland restoration now than to pay for another haze crisis later. The arithmetic is not in doubt. The politics, as always, are.