The bedrock under Dalvíkurbyggð comprises mostly ancient volcanic strata of tholeiite (basalt), which form an enormously thick pile of rock strata. Between the basalt strata are layers of sedimentary rock formed by soil deposited between eruptions, and also in some cases sand and gravel layers deposited by rivers and lakes. The rock pile slopes slightly to the south. It dates back 10-12 million years. In many places dikes stand almost at right-angels to the rock strata; these were feeder conduits to ancient volcanoes, in which magma solidified. A large, thick dike protrudes through the mountain Stóllinn, which stands in the middle of the vally, separating Svarfaðardalur from Skíðadalur. Hálfdánarhurð (Hálfdán´s Door) on Ólafsfjarðarmúli is also a dike. After volcanic activity ceased in the region about ten million years ago, the forces of wind and water eroded Eyjafjöður and its valleys into the rock pile, after which glacial erosion carved out the landscape we see today. Curved end moraines, deposited by glasiers ant the end of the last Ice Age, are striking features of the landscape; one of the most beautiful is Hólsrípill, north of Dalvík. The landscape also shows signs of ancient landslides in screes or talus slopes, for instantce at Upslinn above Dalvík, the hillocks below Hofsskál in Svarfðardalur and Hvarfið at the entrance to Skíðadalur.
The mountains of Tröllaskagi (peninsula between Eyjafjörður and Skagafjörður) are renowned as one of Iceland´s most spectacular areas for outdoor activities. The Svarfaðardalur valley nestles among the mountains and mountain tracks lead from the valley in all directions: into Þorvaldsdalur and Hörgárdalur, over into Skagafjörður in the west, and nort to Ólafsfjörður. Hikers can find suitable walking routes, both for experienced hikers and others. It is recommended that all hikers seek information from locals about hiking roots and do not set off by themselves without notifications.
In 1972 a group of farmers and landowners in Svarfðardalur joined forces with the Nature Conservation Council to found the Svarfaðardalur Nature Reserve, an area of about 8 km2 of wetland on both banks of the Svarfaðardalsá river, from te sea to Húsabakki. Within the reserve are dry river-banks as well as marshes with sedge bogs, ditches and fertile ponds with reeds. This natural enviroment provides an excellent habitat for many species of breeding birds. Migratory birds starf to arrive in April for the summer breeding season. The Svarfaðardalur Nature Reserve was founded to conserbe this unique ecosystem and prevent further draining of the area, which could have a negative imipact on the birdlife. Vegetation and birdlife are protected within the reserve, where nothing is allowed to disrupt the course of nature. From Húsabakki easily followed footpaths can be followed through part of the reserve; walkers are well advised to wear rubber boots. Two birdwatching shelters are located in the nature reserve, one in Svarfaðardalur near Húsabakki and another one near Dalvík at Hrísatjörn.