Vast areas of wetlands in Southeast Asia are undergoing a transformation process to human-modified ecosystems. Expansion of agricultural cropland and forest plantations changes the landscape of wetlands. Here we present observation-based modelling evidence of increased fire hazard due to canalization in tropical wetland ecosystems. Two wetland conditions were tested in South Sumatra, Indonesia, natural drainage and canal drainage, using a hydrological model and a drought-fire index (modified Keetch–Byram index). Our results show that canalization has amplified fire susceptibility by 4.5 times. Canal drainage triggers the fire season to start earlier than under natural wetland conditions, indicating that the canal water level regime is a key variable controlling fire hazard. Furthermore, the findings derived from the modelling experiment have practical relevance for public and private sectors, as well as for water managers and policy makers, who deal with canalization of tropical wetlands, and suggest that improved water management can reduce fire susceptibility. © 2018, Royal Swedish Academy of Sciences.