Iceland’s cruise infrastructure fee : Policy rationales, stakeholder tensions, and governance ambition

Abstract

The rapid expansion of Arctic cruise tourism has intensified debates regarding sustainability, carrying capacity, and infrastructure pressure in vulnerable destinations. In response, the Icelandic government introduced an infrastructure fee on cruise ship passengers. This study examines how policymakers designed and justified the fee as a governance instrument, and what evidence would be required to establish that it functions as one. Using Iceland as a case study, the research combines qualitative document analysis of legislative and stakeholder materials with descriptive statistical data on cruise passenger flows. Policymakers framed the fee around infrastructure financing, the user-pays principle, fair contribution, and sustainable destination stewardship. However, the legislative process revealed stakeholder tensions concerning international competitiveness, regulatory predictability, and regional economic implications. Contextual data indicate a post-pandemic increase in passenger volumes relative to ship calls, highlighting the relevance of passenger-based indicators for understanding visitor intensity alongside vessel arrivals. The Icelandic case sits within a broader international trend, also visible in destinations such as Venice, Alaska, and Norway, in which authorities design and justify tourism taxation as a governance tool rather than solely as a revenue mechanism. The statutory framework does not earmark fee revenue for destination management, and an amendment adopted in 2025 reduced the rate with effect from 2026. The evidence examined establishes the fee’s governance objectives but does not demonstrate its destination-level effects.