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  • Writer's pictureEinar Páll Svavarsson

Reyðarfjörður one of the most affluent small villages in Iceland

Updated: 3 days ago

Reyðarfjörður village East Fjords
Single family homes and apartment buildings in Reyðarfjörður village

Reyðarfjörður is one of the larger towns in the eastern region of Iceland. The town’s recent history is a bit unusual compared to that of the other towns and villages of Iceland, which makes it very interesting to visit, although it can hardly be described as a tourist town. Reyðarfjörður is a countryside town that we can call “modern,” with all the contemporary services people require and demand.

Reðarfjörður is a growing and prosperous town

Gas station at Reyðarfjörður
Reyðarfjörður town has full service when it comes to tourists

While most towns and villages in Iceland have three main factors as their prerequisite for development (fishing, trading, and tourism), Reyðarfjörður also has an aluminum smelter—a strong economic foundation that makes the town prosper. In addition to the smelter, the recently developed tunnel between Reyðarfjörður and Fáskrúðsfjörður, on the one hand, and the tunnel to Neskaupstaður, on the other hand, have helped the town flourish as a service center in the Fjarðarbyggð municipality. The population has increased more in the town than it has in most places outside the southwest Reykjavík capital area, from less than 700 inhabitants in 1998 to almost 1400 in January 2022. This is at a time when many small towns and villages in Iceland have seen a serious drop in population and are struggling to survive.

It has the conflicting poles of an aluminum smelter and nature

Reðarfjörður aluminum smelter
The aluminum smelter at Reyðarfjörður

Interestingly, it is up for debate whether all this economic development is worth it in view of the colossal and ugly aluminum smelter placed in the beautiful fjord of Reyðarfjörður. It is not necessarily a construction you would want to place amidst the beautiful landscape. In addition, a huge hydroelectric power plant, the biggest in Iceland, was built in the highland at Kárahnjúkar by the government to only serve this one customer. Sacrifices were made, as many natural wonders sadly sank in the reservoir serving the dam. Moreover, a stunning canyon was crossed and sacrificed where the dam was built. The debate on the conflict between large-scale industry and preservation of nature and which is more valuable is an old and ongoing one in Iceland. In Reyðarfjörður, you can come eye to eye with the smelter and judge for yourself whether it is out of place in the landscape or if it is a welcome addition to the economy. Without doubt, the smelter has made a considerable difference to the whole area of the East Fjords, with investments worth almost two billion dollars in the project. It has created new jobs and service opportunities and largely contributed to the economic development of the East Fjords.

It is a town that originated with trading and fishing

Church in Reyðarfjörður
Church in Reyðarfjörður town in East Fjords in Iceland

Like most towns and villages around the coastline, Reyðarfjörður village originated as a trading post in the late 19th century. Several small companies set up trading posts, as Reyðarfjörður had good natural harbor conditions at the bottom of the 30-km-long fjord—the longest one in the eastern region. However, despite the presence of rich fishing grounds close by, the village never developed a large-scale fishing industry like some of the other villages in the East Fjords. The village also had an advantage when it came to transportation and communication, as the roads to other towns were closer and easier to access compared to many other places.

It is probably one of the most prosperous small towns in Iceland

School in Reyðarfjörður
School in Reyðarfjörður town in Iceland, a great place for families

Today, Reyðarfjörður is one of the most affluent small villages in Iceland and provides excellent service to both its residents and visitors. Most Icelandic towns and villages have single-family houses; only a few, like Reyðarfjörður, have large apartment buildings. The town offers good education for children from the preschool to the high school level. It has state-of-the-art sports facilities and shares a wonderful swimming pool with its neighbor Eskifjörður. As part of the Fjarðarbyggð municipality, the town offers an excellent health service and care for the elderly. For these reasons, it is a fascinating place to stop at while visiting the East Fjords in Iceland. The town has a good café, nice restaurants, excellent grocery stores, well-furnished accommodations, and a beautiful camping site.

If you're planning to tour Iceland in a rental car, make sure to read this article about the three important things you need to know and the type of car that would be best for your trip!


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