Peat and fire: two risks to check on any estate

Peat and fire are one risk seen from two sides. Oil palm on peat needs drainage. Drained peat dries out, and dry peat burns. When an estate burns, the law looks first at the company that holds the land, whoever lit the fire.

That makes peat depth, water levels and fire history part of the price of an estate in Kalimantan, which has large areas of peat. They’re also harder to fix after you buy than most problems a due diligence turns up.

Why peat burns

Peat is soil made of plant matter that never fully rotted because it stayed waterlogged. To grow oil palm on it, an estate digs canals to lower the water table. The drained peat dries, shrinks and sinks year by year, and in a dry season it catches fire easily. A peat fire can spread below the surface, out of sight, and is hard to put out until the rain returns. Sinking peat also brings flooding in the wet season, and blocks that sink far enough can no longer be drained at all.

Kalimantan has seen this at scale. In 2015, a strong El Niño year, six provinces had declared states of emergency over fires and haze by early September, three of them in Kalimantan: West, Central and South. The haze spread to neighbouring countries. The fires came back in 2019, when satellites picked up more than 1,000 hotspots across Kalimantan on a single day in September.

The peat rules

The rules are in Government Regulation 71 of 2014 on peat ecosystems, as amended by Government Regulation 57 of 2016, signed on 2 December 2016 after the 2015 fires. They divide peat into hydrological units (Kesatuan Hidrologis Gambut, KHG), each a peat area lying between two rivers or between a river and the sea, and give every part a protection or a cultivation function.

At least 30% of each unit must be set aside for protection, starting from the peat domes, and peat 3 metres deep or more is protected too. On land with a cultivation function, the peat counts as damaged if the water table at the set measuring points (titik penaatan) falls more than 0.4 metres below the surface, or if the pyrite or quartz sediment under the peat is exposed.

The regulation bars clearing new land on peat until its functions have been set, digging drainage that dries the peat out and burning peat or letting it burn. A business whose activity damages peat must restore it, for example by rewetting it. The sanctions for failing to do so climb from a government order to freezing and then revoking the environmental permit. Separately, Presidential Instruction 5 of 2019 stopped new licences in primary natural forest and peatland.

Who pays when an estate burns

Clearing land by burning is banned by the Environmental Protection and Management Law (Law 32 of 2009) and by the rules for every right to cultivate (Hak Guna Usaha, HGU), and it’s a crime. The penalties changed in 2026. Law 1 of 2026, in force since 2 January 2026, aligned criminal provisions outside the new Criminal Code with it, removing special minimum sentences in most laws and recasting fines in the Code’s categories. Check the current figures with a lawyer rather than relying on older summaries.

Civil liability is usually the bigger exposure. Article 88 of Law 32 of 2009 makes a business whose activity poses a serious threat to the environment strictly liable (tanggung jawab mutlak) for the losses it causes. As first enacted, the article said this applied without any need to prove fault. The law has since been amended by the Job Creation Law, so have a lawyer confirm the current wording. Plan on the basis that a fire on your concession is your liability, whoever lit it, and that restoring the burned peat is your cost.

The land right is exposed too. Under Government Regulation 18 of 2021, the land ministry can cancel an HGU before its term ends if the holder breaks the ban on burning. The licences and the land right an estate on peat depends on are set out in plantation permits and HGU.

Buyers of the oil look at the same history. If forest on the estate burned after 31 December 2020 and was then planted, the oil from those blocks fails the EU deforestation rules, and many refiners apply similar tests to all their supply.

Before you buy

• Overlay every block on the official map of peat functions and its hydrological unit, and survey peat depth wherever the map shows peat.
• Find out which blocks fall in a protection function and what the company has been told to do about them.
• Walk the canals and water gates, and read the water-table and rainfall records at the measuring points through at least two dry seasons, against the 0.4 metre limit.
• Pull satellite hotspot and burned-area records for every block back to the early 2000s, and ask about any sanction, sealing or court case that followed.
• Check the fire crew, pumps, water sources, watch towers, patrols and arrangements with village fire groups before the dry season, not during it.

Fire crosses boundaries, so look at the land around the estate as well: drained smallholder plots, abandoned land and the villages next door. The wider purchase checklist is in buying an existing plantation.