By Adhityani Arga and Sugita Katyal

YOGYAKARTA, Indonesia, Aug 29 (Reuters) - In the mid-1990s, former Indonesian President Suharto launched a plan to convert 1 million hectares of peat swamp forests into rice fields to achieve rice self-sufficiency in the Southeast Asian nation.

It was an ambitious idea, but fell to pieces rather soon: Thousands of kilometres of channels dug for irrigation instead sucked dry vast areas of cleared peatland, leaving the combustible carbon-rich substance exposed to the hot Kalimantan sun.

In 1997, when the country suffered one of its worst droughts, the peatlands went up in flames, sending a choking haze billowing across the region to Singapore, Malaysia and southern Thailand.

Ten years on, Indonesia's peat swamp forests still burn regularly in the dry season, often shrouding the region in thick smoke and causing misery to millions -- and experts say the haze problem will only get worse if the peat fires continue to rage.

"The Mega Rice Project may have stopped, but the hot spots remain, and fires continue along the banks," University of Nottingham peat expert Jack Rieley told Reuters.

"The year 1997 was the worst El Nino year. There were eight months of dry season, the water levels dropped and the peat became very dry and fire-prone," he said on the sidelines of an international peatland conference in the city of Yogyakarta.

Indonesia has struggled to douse the annual fires caused by slash-and-burn land clearing methods and smouldering peat, with the latter particularly difficult to extinguish.

The fires are episodic, but there was a huge spike during last year's dry season, triggering fears of a repeat of the 1997-98 disaster when dry conditions linked to the El Nino weather pattern caused the choking haze that cost the region billions of dollars in economic losses.

FIRES THREATEN BIODIVERSITY

Researchers estimate in the past 10 years, 24 million hectares (59 million acres) of land in Indonesia have been affected by fire, with 30 percent of the land area on Borneo island burnt at least once and 15 percent burnt twice.

Last year, more than 40,000 fires are estimated to have flared up in drained peatland areas in Southeast Asia, according to Dutch research institute Wetlands International, emitting a cocktail of carbon dioxide, methane and some toxic gases.

Indonesia's burning peatlands could in the long term also destroy the biodiversity of its dense tropical peat swamp forests, home to rare animals such as hornbills, gibbons and the last of Asia's great apes, orangutans.

Experts estimate Indonesia has 20 million hectares (50 million acres) of dense, black tropical peat swamps, formed when trees, roots and leaves rot, that are natural carbon stores.

"There will be 20 million hectares of wasteland, more poverty than ever, destruction of biodiversity and, of course, it will be a major contribution to global warming," Marcel Silvius, senior programme manager of Wetlands International, told Reuters when asked what would happen if nothing was done to save the peat forests.

Simon Husson, an orangutan expert at Cambridge University, said the peat fires did not kill orangutans, but forced them to shift to forests where they had to share food with other animals.

"Within two or three years they die because of shortages of food," Husson told Reuters. "An estimated 2,000 orangutans died in a peat forest in Central Kalimantan as a result of the 1997 fires, and up to 10,000 are likely to have died throughout the Mega Rice Project area."

Indonesia has pledged to halve the number of forest fires this year, but has still to sign a 2002 regional pact to tackle the problem.

Jakarta has vowed to ratify the ASEAN Agreement on Transboundary Haze Pollution but it is still being studied by parliament. It has argued extreme weather and poverty severely limit the effectiveness of government efforts to curb the fires.

"The major problem with peat fires is that fire burns in the ground. It is difficult to track down the source of fire, as it is not visible, and fire spreads very fast," said Harjanto Sukotjo, deputy director for fire control at Indonesia's Forestry Ministry.

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