Wildfires in tropical rainforests and especially peat fires have abundant and wide-ranging negative effects on the economy, ecology and human health. Indonesia has large areas of peat swamp forests that recurrently burn. The use of fire is the most common method for land clearing in Indonesia. As a reaction to the devastating fire events of 2015, the provincial government of Jambi reimposed a more stringent version of the prohibition of burning land, delegalizing this land clearing method for smallholders. From a local perspective through qualitative research at the village level it becomes clear that this regulation is maladaptive as the underlying cause making land prone to fires, the sinking ground water table, remains unchanged by the ban. Further, the impacts of the new regulation vary for different groups of the local population, with severe land management restrictions for food crop farmers. The application of a framework on the political and material dimension of vulnerability reveals that the national policy unintentionally causes economic hardship and landscape changes at the local level. Hence, smallholders have experienced a two-fold perturbation caused by the fires’ impacts and the reinforced ban on burning land.