The economic costs of Indonesia’s 2015 forest fires are estimated to exceed US $16 billion, with more than 100,000 premature deaths. On several days the fires emitted more carbon dioxide than the entire United States economy. Here, we combine detailed geospatial data on fire and local climatic conditions with rich administrative data to assess the underlying causes of Indonesia’s forest fires at district and village scales. We find that El Niño events explain most of the year-on-year variation in fire. The creation of new districts increases fire and exacerbates the El Niño impacts on fire. We also find that regional economic growth has gone hand-in-hand with the use of fire in rural districts. We proceed with a 30,000-village case study of the 2015 fire season on Sumatra and Kalimantan and ask which villages, for a given level of spatial fire risk, are more likely to have fire. Villages more likely to burn tend to be more remote, to be considerably less developed, and to have a history of using fire for agriculture. Although central and district level policies and regional economic development have generally contributed to voracious environmental degradation, the close link between poverty and fire at the village level suggests that the current policy push for village development might offer opportunities to reverse this trend.