An ongoing lava eruption, which started on August 31, is located on a fissure at Holuhraun, an ice-free lava field north of Bardarbunga. Magma has been propagating from underneath the volcano, towards the eruption, causing subsidence and strong earthquakes in the floor of the Bardarbunga caldera.

The subsidence observed since last week is now up to about 20 metres, says Magnus Tumi Gudmundsson, professor of geophysics at the University of Iceland´s Institute of Earth Sciences.

He notes three possible scenarios regarding Bardarbunga. Firstly that the seismic activity, and the Holuhraun eruption, dies down slowly. A second scenario would see the subsidence continue, as well as the Holuhraun eruption, or even another eruption starting nearby.

"But the third scenario is that the subsidence in the floor of the caldera causes an eruption within Bardarbunga. Such an eruption could melt a large volume of glacial ice, and could end up as a powerful explosive eruption, with ashfall," says Dr. Gudmundsson. "The meltwater would perhaps not be released immediately, due to the contour of the caldera, but eventually it would come out as a powerful flood. Obviously, we are worried about this possibility."

This scenario is regarded as very serious, not least because of the potential for a flood, which could cause extensive damage, says the director of the Civil Protection Agency in Iceland, Vidir Reynisson. "We are gravely concerned about this scenario. If we study the history of the Bardarbunga volcano, we see large and powerful eruptions in or near the caldera; we are bound to take this very seriously, especially after the subsidence was observed."

Tomorrow, Reynisson and his colleagues at the Civil Protection Agency will brief the Prime Minister of Iceland, Sigmundur David Gunnlaugsson, on the situation at Bardarbunga. Today, Reynisson met with the National Power Company, (Landsvirkjun), to discuss the potential consequences of a major flood from Bardarbunga threatening hydropower plants to the west of Vatnajokull glacier, which covers the volcano.

"As soon as the subsidence started in Bardarbunga, the National Power Company acted to minimize the risk of damage due to a potential flood," says Reynisson. "Should an eruption occur in Bardarbunga, it would obviously be of vital importance to pinpoint the location of the eruption inside the caldera, so we could predict the direction of a possible flood. Our reaction would then depend on that information." The caldera itself covers about 80 square kilometres, and lies under a 700-800 metre thick ice cap.

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This story, by the Icelandic National Broadcasting Service (RUV), was updated on 9 September 2014, at 22.00 GMT.

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