OSLO, Nov 3 (Reuters) - Drainage of tropical peat bogs is a vast uncharted source of greenhouse gases that may be doing more to stoke global warming than fossil fuels, a conservation group and a Dutch research institute said on Friday.

"The figures are alarming... This issue has been overlooked," said Marcel Silvius, senior programme manager at Wetlands International, a non-profit group whose backers include 60 governments and 15 conservation groups.

Silvius told Reuters that a study with Dutch water research institute Delft Hydraulics estimated that "annual peatland emissions from South-East Asia far exceed fossil fuel contributions from major polluting countries."

Indonesia, which is now in 21st place in a world ranking of greenhouse gas emissions from human activities, would move to third place behind the United States and China if peat were taken into account, it said.

Wetlands International estimated that emissions from Indonesian peatlands alone, when drained or burnt, total 2 billion tonnes of carbon dioxide a year -- almost a tenth of world greenhouse gas emissions from human activities led by burning coal, oil and natural gas.

Similar figures would apply to Malaysia, it said.

Peat is created by dead plant matter compressed over thousands of years in wet conditions that prevent decay. Peat can hold about 30 times as much carbon, a non-toxic gas absorbed by plants as they grow, as in forests above ground.

When drained, peat starts to decompose on contact with air and carbon is released, often aggravated by fires that can rage for months and add to a haze that is an annual health menace to millions of people in the region.


ANDES, RUSSIA

The report said peatlands cover more than 400 million hectares (988 million acres) of land, or about 3 percent of the world's land and fresh water area, ranging from the Russian permafrost to the Andes. It said they store 2 trillion tonnes of carbon dioxide, or about 100 years of emissions from fossil fuels.

Wetlands International would present its findings at a U.N. climate conference in Nairobi from Nov. 6-17 looking at ways to slow a warming that may bring more floods, storms, droughts and raise sea levels.

Silvius said the scientific panel advising the United Nations underestimated emissions from peat in a 2001 report that he said looked mainly at northern forests, where cooler temperatures and less deep drainage mean slower degradation.

He urged governments in rich nations to stop importing timber, pulp and biofuels, such as palm oil which is widely viewed as a clean substitute for oil, grown on drained peat. This would discourage draining of peat bogs for commercial use.

Taking account of emissions from land clearance, "we estimate that a tonne of palm oil grown on drained peatland emits 20 times more carbon dioxide than a tonne of gasoline," he said.

Silvius estimated that protection of peatlands would cost 0.05 euros ($0.063) per tonne of avoided carbon dioxide -- a fraction of the 10.5 euros per tonne in a European Union carbon market meant to squeeze emissions from industry.