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Because Iceland is an island with a relatively small continental shelf, the Icelandic marine ecosystem is different from that of the Barents Sea in that it is smaller and of a much more open nature. South and west of Iceland there is a complete dominance of Atlantic water, while off the north and east coasts the Atlantic influence diminishes in that direction through mixing with colder waters from the north. In "normal years," the Polar Front approximately follows the North Icelandic shelf edge, but may move close to the north and east coasts in cold periods. If it were not for the warm Atlantic water, the Icelandic climate and oceanic conditions would be just as harsh as those of East Greenland.

The history of fishing in the waters around Iceland goes back hundreds of years, but is mainly centered round Atlantic cod, the preferred species in northern waters in olden times. Demersal fisheries at Iceland fall into two categories: the local land-based fisheries conducted by Icelanders, and those of distant water foreign fleets. Until the late 19th century, the Icelandic fisheries were primarily conducted with open row-boats, while the distant water fishing fleets consisted obviously of much larger, decked ocean-going sailing vessels. Until the last decade of the 19th century, almost all fishing for demersal species at Iceland, whether from small open rowboats or larger oceangoing sailing vessels, was carried out by hand lines.

It has been estimated that the combined landings by Icelandic, Dutch, and French fishing vessels were in the order of 35,000 t annually in the period 1766-1777. One hundred years later, the combined French and Icelandic catches averaged about 55,000 t. Compared to the subsequent development of fishing effort and knowledge of stock sizes and exploitation rates, it is obvious that even large fleets of several hundred sailing vessels and open rowboats, fishing with primitive hand lines, cannot have had any serious effect on the abundant cod stock and other demersal species at Iceland.

This changed dramatically with the introduction of the steam and combustion engines to the fishing fleet, as well as the adoption of active fishing gear at the turn of the 19th century. Thus, by the beginning of the 20th century, the otter trawl had been adopted among the foreign fleet, while the smaller motor-powered Icelandic boats started using gill nets, long lines, and Danish seines. Landings no longer consisted almost exclusively of cod, but species like haddock, halibut, plaice, and redfish also became common items of the catch. It has been estimated that the demersal catch at Iceland increased from about 50,000 t in the 1880s to about 160,000 t in 1905, reaching 240,000 t just before World War I. Although cod was still the most important species, the proportion of other demersal species rose to about 30% in this period. Catches declined during the late 1930s, while the exploitation rate increased until the fishing effort decreased drastically due to World War II. After World War II, demersal fish catches increased again.

From 1955, the exploitation rate of all demersal stocks, but especially that of cod, increased rapidly and with few exceptions remained high during the last 45 years of the 20th century. Until 1976, this was due to a combined effort of Icelandic and foreign distant water fleets. However, since the extension of the Icelandic EEZ to 200 miles in 1977, the high rate of fishing has been due to the enhanced efficiency of Iceland's fishing fleet.

In the Icelandic area, pelagic fisheries have a shorter history than demersal fisheries. Commercial fishing for herring started in the 1860s when Norwegian fishermen initiated a land-based fishery on the north and east coasts using traditional Scandinavian beach seines. This fishery proved very unstable and was abandoned in the late 1880s. Drift netting was introduced at the turn of the 19th century and purse seining was introduced in the early 20th century (1904). The latter proved very successful in the fishery of the Atlanto-Scandian herring off the north coast in summer, where the herring schools used to surface regularly. On the other hand, drift nets had to be used in the autumn fishery off the south and west coasts where the herring rarely surfaced. During the 1920s and 1930s, the fishery was limited mainly by the lack of processing facilities. Around 1945, the herring behavior pattern changed and, as a result, purse seining for surfacing schools became ineffective and catches declined. The reasons for this change of behavior have never been identified.

The technical innovations of the herring fishery described in the previous section, as well as better knowledge of the migration routes of the great Atlanto-Scandian herring complex, led to an international herring boom in which Icelandic, Norwegian, Russian, and Faroese fishermen were the main participants. This extraordinary herring fishery ended with a collapse of the Atlanto-Scandian herring complex during the late 1960s. Present-time catches of Atlanto-Scandian herring since the mid-1990s have mainly been taken outside of Icelandic waters. The Icelandic spring spawning herring have not shown any signs of recovery.

An Icelandic capelin fishery began in the mid-1960s, and within a few years replaced the rapidly dwindling herring fishery. The capelin fishery is conducted by the same high-technology fleet as that used for catching herring. During the first 8—10 years, the capelin fishery only pursued capelin spawning runs in nearshore waters off the southwest and south coasts of Iceland in February and March. In 1976, an oceanic summer fishery began north of Iceland and in the Denmark Strait. In 1978, the summer fishery became international as it extended north into the EEZs of Greenland and Jan Mayen (Norway). The most recent addition to the Icelandic fisheries is that of the semi-pelagic blue whiting, a straddling species commonly encountered in that part of the Icelandic ecosystem dominated by Atlantic water, that is, off the west, south, and southern east coast.

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