One year in the late 1930s, the All-Ireland Turf Cutting Competition was held on a bog near Walsh Island, Co Offaly. Spectators came by the thousands to cheer on sleán-wielding champions from around the country. The competition was opened by the Taoiseach, Eamon de Valera, leader of a struggling post-independence Ireland not totally unlike today's: unemployment had rocketed, and the economy was crippled.

But some people thought they had a solution. After the cutting was done – or so the story goes – the local curate, a Fr Breen, and Patrick Gorman, an official from the recently-founded Turf Development Board, took De Valera to the town's handball alley. The alley stood on a hill, looking out over the bog that stretched for miles around, and the crowds of people. Look at this, they told Dev. This is Ireland's wealth. Peat; and the men who can cut it.

Turf has been used as a fuel in this country for hundreds of years; by the seventh century AD, its use was already regulated by Irish law. The seasonal rhythms of cutting and saving – the men cutting in April or May, and the women and children saving in July – have been part of life for dozens of generations. If you ever needed to, you could tell where you were in the country by how the sods were footed to dry: in Kildare, they are piled in pairs crossways; in Mayo, they are leant four upright against each other, with another on top.

But today, there is a battle for the future of the bog. In the 70 or so years since De Valera's trip to Walsh Island, Ireland's peatlands have been exploited as never before. A present-day visitor to the town's disused handball alley would see ugly black scars sprawling over the landscape all around: areas razed by the men and machines of Bord na Móna. According to the Irish Peatlands Conservation Council, nearly half of the bogs that once covered an enormous 1.1m hectares – almost one-sixth of the area of the Republic – have now been cut away. With others consumed by agriculture, forestry or overgrazing, only 20% or so remain intact as habitats for wildlife. And the quality of that 20%, says IPCC director Dr Catherine O'Connell, "is declining rapidly". "We need to conserve the peat, the water, and the plants and animals that are in them," she says.

This June, an EU derogation allowing continued peat extraction on 131 Irish bogs marked as Special Areas for Conservation expired. Facing heavy fines if it did not act, the government – in the person of environment minister John Gormley – introduced a law banning turf cutting on 32 of those bogs, with the others to follow over the next three years. The reception in some quarters has been venomous. Turf cutters have promised to go to prison rather than stop working on their turbaries. "We will be fighting it the whole way," says Turf Cutters and Contractors Association spokesman Luke 'Ming' Flanagan. "We'll be cutting turf anyways. Just the same as people continued to use condoms even though they were illegal. And continued to be a Jew in Nazi Germany."

Winning turf by hand is skillful work, and hard. It takes place at the very edge of the bog, on the face bank – just next to the strip cut the year before. First, the swarth – about six inches of grassy, fibrous topsoil and roots – is cut off. In the old days the sleán, a spade with a right-angled wing, was used to slice out the wet, light-brown sods; now, they are usually cut by machine. Then they are spread on the bog, where they gradually take on the familiar black-brown colour of turf in the hearth. After a few days, when the sods can be picked up without breaking, they are footed in small stacks to dry, and later piled into a rake for transport to the home. By one reckoning, each household consumes a strip of bog 150 yards long, two feet wide and three feet deep each year.

Many turbaries are handed down through families for generations. Luke Flanagan has cut his bank for eight years; before that, it was his father's, and before that it belonged to his uncle, who worked on it for 67 years. This year, Flanagan took his own children out for the first time. "They're only five and seven, and I brought them out to the bog. For the craic, to see would they do a bit of turning. And they absolutely loved it." It's a part of family culture, he says. "I would have a great connection to the bog. My father, for 10 or 11 weeks during the summer, for 14 hours a day – he would have brought home virtually everyone's turf from around this area."

The time of our fathers and grandfathers was the age of the bog in Ireland. In the 20th century, turf was not only the staple fuel for anybody in the countryside, it powered much of the cities too: at one stage, fully 40% of the country's electricity was generated from peat. Millions of tonnes a year were sliced from the bogs. "Many people thought it was a crime to leave these bogs there and not use them," says Donal Clarke, who has just published a history of Bord na Móna called Brown Gold. "It was a crime. That's what they said. This is a national resource, and it is a crime not to use it."

For millions, the cutting of turf is powerfully embedded in the image of rural Ireland. "It is lovely when you go round the countryside in July and you see the tractors hauling the big rakes, the big piles of turf," says Clarke. "There is something very traditional about it. And the smell of it is lovely."

The Turf Cutters and Contractors Association does not want this to change. And it asserts that if they are cut responsibly, bogs are not seriously damaged. "For domestic use, it is sustainable," says Flanagan. "While we're cutting, it is regenerating again. Even going by the government's – the National Parks and Wildlife Service's – own report, my bog, Cloonchambers bog, has actually grown by 12%." (This is seen as a distortion by the NPWS, which says while one particular area may have increased slightly in size between 1995 and 2000, the overall ecological quality of the bog decreased – due to turf cutting.)

TCCA members are also angry that private citizens are being prevented from taking relatively small amounts of turf, while Bord na Móna – which currently extracts around four million tonnes a year – is allowed to continue destroying whole bogs apparently unhindered. The reason the government now wants to turn the turf-cutters off their bogs, says Flanagan, is that they have managed them so well. "It's a bit like firing Alex Ferguson for winning the Premiership," he says.

But for conservationists, the picture of hand-cut bogs is not so rosy. The IPCC believes that, to date, 47% of Ireland's bogs have been cut away for turf. And though the scars left by Bord na Móna in the last 80 years may be painfully visible, they account for only 7%. A full 40% has been lost to centuries of hand cutting. "If you cut turf by hand for 400 years, you essentially cut the bog away," says Catherine O'Connell. "With the way people are talking at the moment, you'd think they weren't doing anything. But just looking at the air photographs of peat bogs, you can see it's all been diced up. Like somebody cutting a block of cheese." They simply cannot regenerate fast enough, she adds. "A bog only grows 1mm per year, so each 30cm sod of turf that's cut vertically – that's 300 years of bog growth."

The argument is complicated further by that old chestnut, the 'urban-rural divide'. One commenter on the TCCA's Facebook page put it bluntly. "Der's people for bog and people for tar!" he wrote. "And the ones for tar should stay the f**k outta the bog!"

"John Gormley thought that the best way to put this through was to hold our nose and shove it down our throats," says Flanagan. "Well, it isn't working. Next March and April when they go out to cut turf again – because I'd imagine that's when they'll start to enforce it – they will have mayhem in the countryside. If they think what's happening with Shell To Sea is a difficult situation, this will make that look like a complete and utter picnic. That's not a threat on my part, that is from having called in the local elections to the doors of 11,000 people personally. And at every second door they have told me straight: there won't be enough places in Castlerea prison for us."

The truth, however, is that the turf-burning era is coming to an end with or without John Gormley. Nationwide, the total weight of turf harvested by hand each year has dropped to just one-fifteenth of what it was even in the late 1980s, and is showing no signs of anything but decline.

The All-Ireland Turf Cutting Competition that once brought those thousands of people to Walsh Island is now a charity event in the village of Ticknevin, Co Kildare, whose results are reported only in the local newspaper. As a wealthier Ireland sees more and more people move to the cities, and ever fewer live in the old houses with solid-fuel ranges, turf is gradually ceasing to register as a part of life for most of the population.

"I was the main organiser of an International Peat Congress in 2008," says Donal Clarke. And people kept saying to me, 'But why are you organising a peat congress?' The consciousness of turf has pretty well gone, I think."

Clarke believes that Ireland has just another 10 to 15 years of peat left, almost all of which will go towards electricity production. The future of the bogs, he says, lies not in exploitation but in eco-tourism: if they can be restored, the plants and animals will come back, and the people will follow.

"Now that people are so much better educated in all these things, they will have an interest in going there," he says.

Attitudes have changed: when de Valera went to the turf cutting championships, an uncut bog was a wasteland. Now, it is an attraction. "You've got areas which they've reflooded, where wildlife has come back again," Clarke says.

"You've got wonderful biodiversity of plants and animals. And it is very beautiful – when you go down there in the spring, and the bog cotton is all in bloom, and the ducks and all the different birds are everywhere – it's marvellous. I think that's the future."

And as for the turf cutters? "There will always be, I suppose, a small number of people who are interested in cutting turf because it's part of their heritage," he suggests.

"But very few people are going to go out and do that back-breaking work. The countryside is covered with bogs that are half cut away – where people have plots, but nobody ever goes there anymore. I know families that have turbaries, but they don't even know where they are. Nobody in the family has cut it for two generations. It's much easier to put in an oil tank, put in central heating and press a button. For another generation or so, people will have memories of cutting turf. After that, you just have to move on."

Patrick Connolly is a car mechanic in Ticknevin, Co Kildare, and the organiser of the Ticknevin All-Ireland Turf Cutting Competition

"We cut our own turf, just for the house. You'd do it in the evenings when you've finished work. Out around six or half six, and you'd be home around 10 or half 10. Last five weeks, we would have been up there now, I would have said there was definitely something in the region of probably 40 to 50 tractors drawing turf off the bog in the one day. I've never seen as many in one day before, ever. Everybody just hit on the one day. You might have to pull over for six or seven tractors, coming up the road in convoy.

"When you're going through life down where we are here, and we've seen nothing else only turf, we've known no other way. That's kind of the way it is. And it'd be cheap as well. You'd go out there and you'd bring out your year's firing for roughly about maybe €400. And that's your year's firing for your house. You go and get €400 of oil and it wouldn't get you too far. Oil is too expensive and you don't get the same heat off oil. I've always maintained it's unhealthy. I just think it is, there's not the same heat off it.

"I'd be one of the main organisers of the turf cutting competition. We call it the Ticknevin All-Ireland turf cutting competition. That started in 1984 and we've never missed a year. We postponed it one year for a week because it was raining. But that's all. We'd get from around 400 to 1,000 people at that, this year we had 23 teams. And the money we raise goes to charity. I competed every year bar last year and this year. The problem I had was, I won it a good few times and I said I'd step back. Because you just can't keep winning it, you ruin it. It's like Kerry winning the football.

"You could get a lad there and he'd go terrible fast, he'd throw a load of turf up, but it wouldn't be worth a shite. Because you're breaking up the turf and everything. So the way we do it is neatness of the bank, straightness of the bank. Your turf size should be the same every time. And that every turf you're throwing up is on the barrow, that there's not a complete mess made of the place. You could put out 40 barrowloads and I could put out 35 and I could beat you. Because mine would be nice and neat.

"I think they're wrong in ways that they're stopping people cutting, and maybe right in other ways. There's no harm in where there's bogs that were never touched – leave them that way. But I've seen Bord na Móna; there was a bog round here that I would say was probably about 1,000 acres and they went in, they levelled the whole lot, and there wasn't a word about it. Why didn't they keep that bog? You've a bog over in Clongorey here beside us where people are doing their cutting every year. And they're trying to stop all that. And a friend of mine, his family is cutting for nearly 200 years on it, and they're trying to put him out of it. It's his way of living, it's his way of life."

Seamus Gallagher is an 80-year-old farmer in Ballyhaunis, Co Mayo

"We've had a good summer and the turf is got now. This year the weather was good and we went early because the bogs were dry – it would be the middle of April. Other years then it all depends on the weather. If the bogs are wet you cannot touch them.

"When I was younger I was away from home, in England. And then when I came home work wasn't great so I started to cut turf. Cut it by hand. And I used to sell trailer loads, 12 or 14 trailer loads a year. I'd be 30ish at that time and I done it for a good few years. I often went out to work in the morning on the buildings, and then come home in the evening, have a dinner and have a couple of hours on the bog. Trying to survive, let's put it that way.

"Nowadays it's all done with machine. Once it was the sleán; that's going back some years ago now. But the men got weaker, and not as fond of work. I cut by hopper now. I did cut it by hand years ago.

"There's a lot less people cutting turf. One time when you'd go to the bog, there could be 10 or 15 men in different sections, you know. And when it'd come about 11 o'clock and they were getting knackered, they'd all meet up together and have a sandwich and whatever was going. They all talked, that's all they had. At that time there wasn't much television. They'd look forward to it and they'd all have their chat and tell how much turf they had cut. One would always be trying to outdo the other.

"You could go to the bog now and you wouldn't see anybody. You'd be all on your own. Going back years ago too you'd see hares, you had grouse, all those things. In the mornings you'd hear the corncrake. It was lovely to hear them. But that's gone, you see. Burning bog, I blame it on that. They see the fires and it's the time of year they would be nesting and all that. It vanished them.

"We had a range at one time, and we used that because it was handy for cooking, and you were heating the house. Then the oil took over, but we still use the open fire. To sit at a turf fire now, it's company. If you were sitting on your own, you watch it, and no matter what you're doing, it's company. We still have it and we wouldn't be without it. We still light the fire now, in the summer."