A wildfire at Mount Bromo reveals the economics of Indonesian fire

FIRE SPREADS across one of Indonesia's most photographed landscapes, and the market's immediate instinct will be to ask about listed airlines, hotel groups and tourism plays. The more structural question is why an archipelago that has spent a decade promising to end its fire crisis keeps setting its own land ablaze.

A wildfire at Mount Bromo in East Java has grown from around 60 hectares on 6 August to 176 hectares by 9 August, scorching the volcanic caldera known as the "sand sea", one of Indonesia's most popular tourist destinations. Authorities closed the Bromo Tengger Semeru National Park on Saturday, with visitors offered refunds or rescheduling. The park chief, Mr Rudijanta Tjahja Nugraha, left the reopening date open, saying the terrain—steep volcanic slopes with hotspots unreachable by land—made containment difficult. Hundreds of firefighters, police, soldiers and volunteers have been deployed alongside water-bombing helicopters and drones.

The immediate cause, according to the media agency Antara, is land-clearing work. Causation of this kind is hardly new. Indonesian fires are rarely acts of nature. They are acts of economics.

To put the Bromo blaze in context, the country is in the grip of a fire season that outpaces previous El Niño events. Indonesia's weather agency, BMKG, detected 5,019 wildfire hotspots by mid-July, rising at a faster rate than in prior El Niño years. The satellite monitoring platform FireWatch counted more than 96,000 hotspots across Indonesia as of 27 July. In the first half of 2026 alone, the country lost over 107,000 hectares to fire—more than double the area destroyed in 2023, the last El Niño year. BMKG attributes the heightened risk to current El Niño conditions combined with seasonal dry winds from Australia.

The structural problem is what the weather amplifies. Indonesian fires are driven by land clearing, predominantly for palm oil and other plantations. Fire is cheap. It requires little labour, no heavy machinery and no fuel costs beyond the initial spark. The incentive is straightforward: clear land faster and cheaper, pocket the margin, and let someone else deal with the consequences. When rain fails to arrive, as it is not arriving now, the fire escapes the plot it was meant to tidy.

Governments have tried to address this cycle before. Indonesia introduced a national no-burning policy after the 2015 haze crisis, when man-made fires cost the country $16.1 billion, or about 2% of GDP, according to the World Bank. In December 2025, the attorney general announced potential fines of $8.5 billion against palm oil companies and miners operating illegally in forest areas, a figure that signalled political intent. Permits were stripped from firms including an Astra-affiliated gold mining unit and a China-backed hydropower plant earlier this year.

Yet here is where the system begins to creak. Fines are only as effective as the revenue they threaten. For large plantation operators, a fine that arrives months later, after appeals and legal manoeuvring, is a cost of doing business, not a deterrent. Smallholders and traditional farmers, who also use fire, face different incentives: they lack the capital for mechanised clearing and operate outside the regulatory net. Enforcement agencies are understaffed, jurisdictionally fragmented and politically exposed. The result is a familiar one: rhetoric improves while the underlying calculation does not.

The tourism angle is instructive. Tourism supported 24.4 million jobs—17.5% of total employment—in 2024, with travel receipts of $16.7 billion, according to the OECD's July 2026 tourism report. A previous academic study found that the 2025 closure of Bromo Tengger Semeru National Park led to an 80% drop in hotel occupancy in the surrounding area. The park collected more than Rp27.3 billion ($19 million) in non-tax state revenue in 2018 from visitor fees alone, according to the Jakarta Post. The economic cost of repeated closures extends beyond ticket sales to the smallholders who run homestays, the transport operators who drive jeeps into the caldera and the local food vendors whose customers arrive in tour buses.

The danger is not that Bromo's fire will destroy Indonesia's tourism. The country has too many destinations for a single volcano's smoke to be decisive. The danger is slower: a gradual erosion of the natural assets that tourists come to see, and a pattern of reactive governance that treats symptoms rather than causes. When fires are put out with helicopters and firebreaks, but the land-clearing incentive remains, the next dry season will bring another fire.

A study published in Nature Communications found that draining peatlands—the carbon-rich wetlands that cover much of Sumatra and Borneo—makes them exceptionally susceptible to underground fires that can smoulder for months and release vast quantities of greenhouse gas. Peatland fires are harder to see, harder to fight and harder to price. They are the ultimate externality: the cost is borne by the atmosphere, the public health system and the climate, not by the person who struck the match.

What should be done? Three things, in order of difficulty.

First, restore and maintain peatland water tables. This is not new advice. The Indonesian government has invested in canal-blocking schemes since the mid-2010s. What it needs now is sustained funding and local governance capacity to keep those schemes in place during dry seasons. Peat fires can be prevented by keeping peat wet. That is simple engineering; its failure is political.

Second, make land-clearing without fire cheaper than clearing with it. Subsidies for mechanised equipment, access to credit for smallholders and transparent satellite monitoring that triggers automatic penalties—not fines negotiated years later—would shift the incentive. The government's $8.5 billion fine programme moves in this direction, but it must be credible, not theatrical.

Third, accept that fire-free land clearing is politically uncomfortable because it raises the cost of expansion for plantation companies and smallholders alike. The question is whether those costs are cheaper than the repeated crisis that follows. The arithmetic says they are. In 2015 the cost was 2% of GDP. In 2019 it was $5.2 billion, according to the World Bank. The tourism sector, which employs one in six Indonesians, is only one of several industries that suffer when smoke blankets the archipelago.

The Bromo fire will be contained, as fires usually are. Helicopters will leave, the caldera will reopen and tourists will return. Unless the land-clearing incentive changes, the next dry season will bring another headline with a different volcano's name. The structural lesson is not about firefighting. It is about making fire too expensive to light.