Plans to build a new road in Iceland ran into trouble recently when campaigners warned that it would disturb elves living in its path. Construction work had to be stopped while a solution was found. From his desk at the Icelandic highways department in Reykjavik, Petur Matthiasson smiles at me warmly from behind his glasses, but firmly. "Let's get this straight before we start - I do not believe in elves," he says. I raise my eyebrows slightly and incline my head towards his computer screen which is displaying the plans for a new road in a neighbouring town. There...