Vast areas of Brazil and Paraguay and much of Bolivia are choking under thick layers of smoke as fires rage out of control in the Amazon rainforest, forcing the cancellation of flights. Satellite images yesterday showed huge clouds of smoke and much of the Amazon basin burning as fires, originally set by ranchers to clear land, have raged into the forest itself.

From Santa Cruz in the east of Bolivia, where flights have been grounded, to the Brazilian frontier city of Porto Velho, where the river Madeira has been made unnavigable, burning smoke has blocked out the sun and local communities have begun to complain of respiratory disorders. Roberto Smeraldi, head of Friends of the Earth Brazil, said the situation was out of control: "We have a strong concentration of fires, corresponding to more than 10,000 points of fire across a large area of about two million sq km in the southern Brazilian Amazon and Bolivia."

Each year at the end of the dry season, in anticipation of the first winter rains, farmers and cattle ranchers throughout South America set fires to "renovate" pasture land. But this age-old cycle has spun out of control as deforestation and climate change have created a tinderbox. There has also been a massive expansion of cattle ranching into forested areas, where fires are then set to clear an area after chainsaws have felled the trees.

Mr Smeraldi was clear on who was to blame for this year's fires: "They are mainly, I would say more than 90 per cent, the result of expanding cattle ranching." The first rains have arrived but they are weaker than usual in most areas and have been useless against the fires.

In the past three years Brazil's National Development Bank and the World Bank have poured funds into the southern Amazon, fuelling the expansion of the cattle industry with new slaughterhouses and four million additional head of cattle arriving in exactly the areas where the fires are now. Conservationists have said that while governments insist they are doing their utmost to stop deforestation they have been putting in place incentives for the destruction of the forest. "It is taxpayers' money fuelling these fires," said Mr Smeraldi.

Standing forests, of which the Amazon is the largest in the world, play a vital role in regulating the world's climate, both absorbing harmful emissions and acting as vast carbon sinks. At present these forests are not included in the international carbon trading schemes set up under the Kyoto agreement – the only serious global effort to limit the emission of greenhouse gases. In recent weeks there has been an increase in efforts to raise the issue of avoided deforestation as a means of limiting the impact of catastrophic climate change.

"These fires are the suicide note of mankind," said Hylton Murray Philipson, from the London-based charity Rainforest Concern. "While politicians talk about defining moments, destruction will continue until we begin to attribute real value to the standing forest.

"The forces of globalisation will intensify with the construction of two asphalt roads linking the western Brazilian Amazon to the Pacific coast of Peru, dramatically shortening the export route to China," said Mr Murray-Philipson. "If we do not enable local people to gain a livelihood from the standing forest, it will continue to be converted into cattle pasture and soya prairies – and we will only have ourselves to blame." Brazil and Indonesia do not appear on conventional industrial indices of the world's leading polluters but both countries are among the world's top four carbon emitters when deforestation is factored in.

(By Daniel Howden and Jules Steven, The Independent, 05/10/2007)