1. Budgets
  2. Road building plans
  3. Master plans
  4. Natural resources management

1. Budgets

The budget of a social organization, such as a local authority or a state, is an ordinary matter that nevertheless tends to overshadow other ordinary matters. At first sight, it may seem inappropriate to link issues of such different magnitudes because the proportions of votes would be very dissimilar. Let us examine this point in further detail.

When a budget is drawn up, there is always difficulty in striking a balance between the burden that can be put on individuals and companies in the form of taxes and the requirements that have to be met by expenditures. There is also a conflict in terms of the individual revenue items, as well as in terms of priorities between the various categories of expenditure items. Fund voting also involves similar conflicts and oppositions. Here is a description of how budgeting can be handled with fund voting.

  1. The finance committee draws up a draft budget.
  2. It presents the draft to those who will be involved in the fund vote.
  3. The participants have the opportunity to propose amendments.
  4. They are given a certain length of time for this purpose before the vote is taken.
  5. At the end of the period they present the proposals that have been put forward.
  6. The finance committee selects the first amendment proposal to be put to a fund vote, adding other variants considered necessary.
  7. Further amendments can still be proposed after voting has begun.
  8. The finance committee puts the amendment proposals to a fund vote, one after the other. It may merge two or more proposals into a single issue, presenting them all at the same time.
  9. An issue can be re-examined in the light of a change in circumstances. In such a case, votes that have been spent in the previous vote are returned to the relevant voters.

The first vote might be held on four alternatives: A, the proposed amendment, B, proposing that no change be made, and C and D, which are variants added subsequently by the finance committee. The amendment proposals are then put to the vote, one at a time. Meanwhile, more amendments are proposed, and the voters are informed of them. It could happen, after several proposals have been passed, that someone might feel the premises regarding the first of these have now changed. For example, the first proposal might have been to increase the contribution allocated to a particular activity, but in the light of proposals passed subsequently, the grounds for this decision are now no longer the same. In such a case, it would be fair that the votes deducted for the acceptance of the first proposal be reimbursed to those who staked them.

In this way, the preparation of the budget would consist of a series of issues, large and small, but it would at all times be possible to consider the whole picture while examining each individual issue.

2. Road building plans

Other financial questions, for example road building plans, could be treated in the same way. Iceland’s parliament has approved such plans for periods of four years at a time. Having a four-year framework, instead of only one year at a time, as was previously the case, has the advantage not only of greater continuity in planning, but also that members of the parliament have the chance to show how they serve the interests of various localities in the long run. The procedure has been that the MPs for each constituency press to have projects approved for their constituency, while other projects are defined as being of national concern. Plans as approved by the parliament represent the outcome of this process of compromise.

The compromise could be worked out with fund voting, with a draft road building plan being proposed first by the Ministry of Transport, with amendments being invited and put to the vote. MPs would then stake their votes on the various alternatives in accordance with the importance they and their constituents attached to them, and this would also show which projects were of national interest, as perceived by the MPs.

3. Master plans

While the master plan for a local government area is a major issue, the amendments to the draft proposed by the planning committee tend to be minor. Of course, this is not to suggest that the planning committee does not have to resolve many points of disagreement before producing its draft. One possibility would be to submit these points to fund voting by those concerned during the preliminary stages, and then to use fund voting again, after the committee has finished its work, to deal with proposals for amendment.

4. Natural resources management

Let us consider two examples in which fund voting could be used to resolve disputes over the use of natural resources. The first concerns the priority ranking of power development projects. The resources, consisting of hydroelectric and geothermal energy, have potential uses other than as sources of energy: rivers and geothermal fields and their immediate area can be used for angling and as tourist attractions. Some people may insist on protection of these areas. These conflicting viewpoints and interests could be assessed by fund voting. The second example is the control of commercial fishing. Marine resources have been regarded as common property. Many factors must be considered when seeking to influence the productivity of individual marine species and of the ocean as a whole; a wide variety of opinion exists concerning the methods and there are many conflicts of interest.

a. Master plan for power development

The Icelandic government is preparing a master plan for the harnessing of hydroelectric and geothermal energy resources. The Ministry of Industry and Power is in charge of the project; the steering committee has four teams of experts to assist it. Publicity is in the hands of Landvernd (Icelandic Environment Association). The master plan is based on a Norwegian model. The first stage consists of the production of reports on each individual potential power plant. The teams of experts, each consisting of about 10 persons, then give the various alternatives points on the basis of these reports. Each group has a different point of view: 1) conservation of the environment and cultural heritage, 2) outdoor life and natural resource rights accompanying property, 3) the national economy, employment and rural development, and 4) power resources. After they have made their evaluations, the next step consists of prioritization by the steering committee. The aim is to consider 60 possible hydroelectric plants and 40 sites using geothermal power. The first stage, which was completed in the spring of 2003, covered all the possible hydropower sites in the glacial rivers in the uplands and the geothermal sites close to inhabited areas. In the first attempt at evaluation, at the end of 2001, twelve hydroelectric sites were included.

Various factors have to be taken into consideration when evaluating the overall impact of the power plants, and it is difficult to compare them directly. The groups of experts each make their evaluations based on their own premises. In some cases, the consequences can be reduced to a comparable basis by means of calculating profit or loss in monetary terms. In many cases, however, the impact can only be expressed in broad terms, with words such as ‘minor’, ‘major’, ‘very great’, etc.

The steering committee sought the advice of experts in assessment methods on how to establish an order of priority. They were against the method that had been used in Norway; instead, they recommended an analytic hierarchy process (AHP), which the groups of experts adopted. Both methods lack the inbuilt curbing of extreme points of view that is the fundamental characteristic of fund voting. This weakness may come to light when the views of the various groups are to be harmonized into a single conclusion. It is also difficult, using these methods, to combine assessment of large and small power plants, and of plants that are assessed in very different ways. Let us examine how fund voting can be used to handle situations of this type.

The aim of a master plan is to arrive at a consensus on the utilization of resources by weighing opposing interests and points of view. The intention is to sort the alternatives into three categories, one consisting of potential sites that should definitely be harnessed, another of sites that definitely should not (i.e., they should be protected), and a third of sites that have both pros and cons about which there is no fundamental disagreement. If fund voting is to be used, the first step is to present a survey of all the alternatives. Then the alternatives in a particular area are put to a vote. Let us consider a scenario in which there are two power development alternatives, A and B, on a river; the two are mutually exclusive. Alternative A involves one 54-MW power plant; alternative B involves two power plants on the river, with a combined generating capacity of 64 MW. Alternative C is to declare the water course a protected area.

Some people might feel it was too early to adopt a position on either harnessing or protecting the area, preferring to clarify, through fund voting, the question of how certain viewpoints would be treated. One of these, for example, might be the question of balance in regional interests. Postponing the issue gives the leadership handling the vote the chance to take the matter up again at a later stage. Those in favour of postponement must be sure that they will not have to spend votes again and again on the same issue. This could be achieved by having the votes that this result cost each voter restored to him when the issue is put to the vote again; the voters would be free to take a different position in the subsequent vote.

In the case in point, voters could choose to stake their votes on the following four alternatives:

A.     One 54 MW power plant.

B.     Two power plants with a combined capacity of 64 MW.

C.     No power plants to be built on the river.

D.    No decision for the time being on power development or on declaring the river a protected area. Those who back this option will (if it wins) be able to use the votes they stake now in a vote later on, either for or against harnessing the river’s hydroelectric potential.

Large and small power plants; power plants that are assessed in very different ways

Voters faced with the question of how many votes to stake on the 54 MW and 64 MW alternatives will want to be able to form their own ideas of how important these alternatives are in relation to other potential power-development projects that might vary in size from 1-2 MW to more than 100 MW, so as to be able to gauge how many votes they are prepared to stake. Weighing up the pros and cons of power plants of the same size may also prove very difficult. This is the nature of fund voting.

Let us consider another example in which two alternatives that are not mutually exclusive are treated together because they are felt to belong together. Let us call them R and S.

The alternatives to be voted on are as follows:


A geothermal plant is to be expanded by 40 MW.


A new geothermal plant is to be built in the area, with a capacity of 40 MW.


The area where the proposed expansion would take place is to be declared a protected area.


The area where the proposed new plant would be built is to be declared a protected area.


The entire area is to be declared a protected area.


For the time being, no decision is to be taken, either on development or on protection. If this postponement is approved, then those who support it will be able to use the votes they stake on it in a vote at a later stage on the issue of development and protection in the area.

It appears that an examination of the power development and protection alternatives using fund voting would group the possibilities into three categories: one in which development receives clear support, one in which protection receives clear support and a third in which the numbers of votes staked in support of development and protection do not differ very greatly.

This could, in fact, be approached in a different way, before fund voting takes place, by making one proposal for a master plan covering all the power development and protection alternatives. Amendment proposals could then be sought and proposed, as described above in decisions concerning the budget. Still another approach could consist of dealing with a few power development and protection alternatives and propose them as the beginning of the master plan. After this, a proposal concerning a new power development and protection area would be proposed and the process continued, as described above, concerning the budget, for example by proposing an amendment to what was originally proposed.

b. Control of commercial marine fishing

After Iceland gained full control over its fishing grounds in the 1970s, the government began to control fishing by imposing restrictions on effort (i.e., the time that vessels were permitted to engage in fishing). Limits varied from one type of vessel to another and from one season to another. As the fishing fleet was thought to be far too large, the government also made funds available for the decommissioning of fishing vessels. In 1984, it started awarding catch entitlements (quotas) for fish as the main method of control, replacing effort restrictions. These quotas were awarded on the basis of their previous catch performance, and applied to individual vessels; thus, someone who wanted to catch more cod could only do so by buying a vessel with its quota. Later on quotas were permitted to be bought and sold without buying or selling the vessels attached to them. Similar arrangements were introduced for more and more demersal fish species. – Even though catch restriction was the main method of control, for a long time part of the fishing fleet was allowed to go on making catches subject to effort restrictions; this accounted for only a small proportion of the total catch. In addition, catches are subject to permanent restrictions by means of regulations on net mesh sizes and temporary closures of certain areas to all fishing.

Fishing off the Faroes was controlled by catch restrictions for some years, but in 1996 this system was abandoned and replaced by effort restrictions, with allocations of fishing days that can be transferred to other vessels. The vessels are divided into categories, each of which is allocated an area in which it may fish. Later amendments were made to the restrictions.

Controversy surrounds both methods. One of the criticisms is that fishing vessels with cod quotas (for example) catch other fish besides cod in their nets, but have no permits to catch them. Even if they hold permits to catch more than one species, the overall catch is skewed because the catches made by each individual boat may be in different proportions to those covered by its quota. No attempt will be made to tackle this problem here. In an effort-control system, a great number of factors have to be assessed regarding vessel categorization and the boundaries of areas in which each category is permitted to fish, or which particular types of fishing gear are permitted. These questions can be handled with fund voting, in which the participants show by their vote stakes how much they are in favour of making changes to the categories, the areas or any other factors.

In both catch and effort control systems, prices may be placed on permits: for catch quotas, on the one hand, or fishing days on the other. Such prices could be calculated either according to special rules or as a result of bids offered by the vessel-operators. Naturally there will not be unanimity on questions such as these; variety of opinions could be expressed through fund voting.

A sudden switch from effort control to catch control, or vice versa, is a major undertaking. In the case of fund voting, it can be tackled by setting out a proposal for a total solution, those concerned being given the opportunity to suggest amendments. These can then be treated in the same way as is described in the section above on budget proposals. Amendments could also be introduced in stages, but it is not certain that this would be easier to implement.

Who should participate in fund voting on the control of the use of fishing areas?

Who should be in charge of such fund voting? People’s opinions on this are not strictly along political party lines. At first it would be advisable to use fund voting only as a guide for the government. It would then be possible to consider putting the Parliamentary Fisheries Committee in charge of fund voting. The members of the committee might have the right to vote. The committee could also encourage others to participate in the same way as is common for parliamentary committees when they seek external opinion on issues. Local councils might also be allowed to become involved with the issues and be allotted fund votes in proportion to the weighting of the fisheries and fish processing, the scale being possibly the number of weeks of employment in both of these branches of the industry. The Fisheries Association would be in charge of the implementation on the basis of weeks of employment as counted by Statistics Iceland.