Iceland’s resource profile is defined by its dynamic geological environment. The island sits atop the Mid-Atlantic Ridge, the divergent boundary where the North American and Eurasian tectonic plates are pulling apart. This tectonic setting and a volcanic hotspot create a landscape rich in geothermal heat and glacial meltwater. The proximity to the Arctic Circle creates vast ice caps that feed powerful rivers and provide substantial freshwater reserves. This combination of fire and ice dictates the country’s primary wealth, concentrated in energy and marine biology rather than traditional mineral deposits.
Harnessing Geothermal and Hydroelectric Power
Iceland has leveraged its geological location to achieve near-total energy independence, with almost 100% of its electricity generation coming from renewable sources. The country’s position on the Mid-Atlantic Ridge provides access to high-enthalpy geothermal sources. This intense subterranean heat is used directly for power generation, as exemplified by the Hellisheiði and Nesjavellir power plants. Geothermal energy also provides heat for approximately 90% of all Icelandic homes through extensive district heating systems.
The country’s substantial ice cover, which makes up about 11% of its surface area, is the source of abundant glacial meltwater. This meltwater feeds short, fast-flowing rivers ideal for hydroelectricity. Hydropower accounts for the largest share of the electricity on the national grid, utilizing the country’s steep topography and high precipitation to drive turbines. Many large hydropower projects, such as those owned by Landsvirkjun, the National Power Company, were developed to attract energy-intensive industries.
The reliable and low-cost electricity has made Iceland an attractive location for energy-intensive manufacturing, which is a significant consumer of the country’s power. Aluminum smelting, for instance, is a major industrial user, drawn by the competitive energy prices. The successful integration of hydroelectric and geothermal sources has made Iceland the world’s largest electricity producer per capita.
Marine Life and Fishing Stocks
The ocean surrounding Iceland contains some of the richest fishing grounds in the North Atlantic, sustained by the convergence of warm southern currents and cold Arctic currents. This mixing supports high biological productivity and robust populations of commercially valuable fish species. Key species driving the fishing industry include Atlantic cod, haddock, saithe, and capelin, which form the pillar of the nation’s export economy.
The management of this resource is governed by a comprehensive Individual Transferable Quota (ITQ) system, introduced in 1990 to combat overfishing and promote sustainability. Under this system, the Marine and Freshwater Research Institute provides scientific recommendations for the Total Allowable Catch (TAC) for each species. These TACs are divided into permanent quota shares that can be bought and sold by fishing companies, creating an economic incentive for long-term resource preservation.
The ITQ system ensures the biological health of the stocks while improving the economic efficiency of the fishing fleet. This management allows the fishing industry to remain a major economic driver, with the majority of the seafood catch being exported to international markets.
Geological Materials and Freshwater Reserves
Iceland’s geological composition lacks traditional mineral wealth such as coal, oil, or precious metals, but provides unique non-metallic materials derived from its volcanic activity. The island’s volcanic origin results in an abundance of porous, lightweight materials like pumice and scoria. Pumice is a light-colored, glassy rock formed from explosive eruptions, while scoria is a darker, more crystalline volcanic cinder.
These materials are primarily extracted for use as aggregates in construction, for landscaping, and for their insulating properties. The country also has deposits of crushed stone and aggregate, which are essential for domestic infrastructure projects. The mining of diatomaceous earth, which is rich in silica, has largely ceased due to environmental considerations.
Freshwater Reserves
Glaciers, snowmelt, and high precipitation rates ensure an immense supply of pristine freshwater, largely uncontaminated due to the country’s low population density. The water systems, including numerous rivers and lakes, are naturally filtered through the porous volcanic bedrock, making the groundwater an extremely clean source for drinking water. This abundant, high-quality water is used for domestic consumption, is integral to hydroelectric power generation, and holds potential for future export.