The Price of Wealth

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For building its plant, Alcoa gets access to Iceland's cheap and clean hydropower and a new harbor facility to be built nearby. The company says that when production begins in 2007, the plant will be one of the most efficient, safe and environmentally friendly in the world. Aluminum is smelted from an oxide called alumina, which is refined from bauxite ore — and Fjardaál will be capable of churning out 322,000 metric tons of aluminum each year. Alcoa says it will recycle materials and use the most eco-friendly production technology to control fumes and minimize waste discharge into the sea and groundwater. It is determined to "play a sustainable role in the community," says Hrönn Pétursdóttir, the company's community relations manager at Fjardaál. "We're going to be here for a long time."

To generate power for Alcoa's smelter, Landsvirkjun is building the Kárahnjúkar dam; at 190 m high and 730 m wide, it will be the tallest rock-and-gravel dam in Europe. Due for completion in 2009, Kárahnjúkar, together with two smaller dams, will create the Hálslón reservoir, submerging 57 sq km of glacial river valley in the process. The related Kárahnjúkar power plant will produce 4,560 gigawatt hours (GWh) of energy per year by harnessing the Jökulsá á Dal river as well as the Jökulsa í Fljótsdal waterway, some 25 km to the east.

As a sign of its environmental concern, Iceland's government plans to create a massive Vatnajökull National Park adjoining the Kárahnjúkar project in the glacial highlands, a move Alcoa and environmentalists support. The park could be as large as 5,275 sq km, 50% bigger than Europe's current No. 1, Norway's Hardangervidda.

Sigfússon, who's also a geologist, is convinced the dam project is environmentally unsound. Pointing to the planned relocation of a glacial waterfall and the damming of sediment-carrying glacial rivers, he warns that "a huge plateau of silt" will eventually form around the large dam that, together with dust from normal soil erosion, could be blown into storms by the heavy winds that sweep Iceland. These dust storms, in turn, could damage the vegetation that the reindeer depend on for survival. "We are concerned about early summer winds, erosion and dust storms" taking their toll on the land, Sigfússon says.

Arnalds responds that much of the region is already dusty and barren, but that soil erosion is being taken seriously in Iceland and research is under way to devise techniques to slow or reverse the process. He concedes that roughly 600 pink-footed goose nests will be lost, but says that the number represents just 1.5% of such nests in Iceland; the birds are not a threatened species. Arnalds also acknowledges that part of the herd of calving and spring-grazing reindeer may be affected — but the animals could well adapt to the change.

Apart from environmental damage, Sigfússon believes Iceland's image is suffering as a result of the Alcoa smelter and the Kárahnjúkar power projects. "We are putting ourselves in a developing-country situation," he says. "All the aluminum will be exported elsewhere. We're not going to build cars or airplanes with it, so all the added value will happen elsewhere."

The contracts have been signed and, as Finnsson says, "there is not much that can stop this short of earthquakes." But at a time when countries around the world are weighing the balance between environmental and economic interests, what happens in the eastern highlands could have repercussions far beyond Iceland's borders.