The islands of Sumatra and Kalimantan (Indonesian Borneo) are the biggest casualties. In the past 15 years, a third of the rain forest has been logged or burned to make room for crops and palm oil plantations, critically endangering not only the endemic wildlife but also the health and livelihood of millions of islanders. Natural forests keep rivers pristine, soil fertile, and wildlife nourished. Take away the trees and the ecosystem collapses. Violent floods, landslides, polluted waterways, and failed harvests have plagued both islands, and ecologists blame deforestation. Sumatra's tigers have declined by at least 60 percent over the past 30 years, and the world's last remaining wild orangutans, which inhabit both Sumatra and Kalimantan, have dwindled by 30 to 50 percent in the past decade. "If significant changes aren't made, we'll lose these forests," says Kerry Cesareo, senior program officer with the World Wildlife Fund.

Criticism of the Indonesian government for mismanaging its natural resources dates back to President Suharto's era, when, in 1967, he nationalized the country's abundant forests. A few timber concessionaires carved up the spoils, and old-growth trees began falling at a record clip. The rural provinces and villages, long accustomed to managing their own natural resources, lost all harvesting rights. Thirty years later, Suharto was ousted, the country's economy was in crisis, and the forests—no longer in the central government's moderately protective grip—became more vulnerable than ever to law-evading timber companies.

In 2001, Jakarta, in an effort to stem the widespread deforestation, issued a ban on the exportation of all logs. Three years later, the government extended the ban to all sawn timber. In 2005, while visiting the plundered province of East Kalimantan, the country's newly elected president, Susilo Bambang Yudhoyono, pledged severe penalties for anyone involved in the illegal logging trade. "Our patience has run out," he said. "Our environment has been destroyed, our economy is suffering. (According to the Ministry of Forestry, black market timber robs the country of more than $4 billion a year in forestry revenues.) But rampant corruption and weak law enforcement effectively stymied any progress, says Alexander von Bismarck, executive director of the Environmental Investigation Agency (EIA), which in recent years has exposed massive smuggling rings, with much of the Indonesian timber headed for China. "Indonesia's frail governance is no match for the size of bribes brought it by criminal syndicates in Singapore and Kuala Lumpur," says Von Bismarck. And since those most responsible are not being held responsible, he adds, business continues as usual. The Nature Conservancy's Meijaard, however, contends that illegal logging has declined significantly thanks to government crackdowns but says that forest loss continues at a breakneck pace as a result of poor land management.