Rauðavatn (Red lake) is a lake on the outskirts of Reykjavík. Lake Rauðavatn is not a big lake but well known because road no. 1, from the capital to the east of the country, passes by. The area is very popular for recreation, walking, cycling and horseback riding.
During the turn of the century, 1900 politicians considered to change the riverbed of Hólmsá over to Lake Rauðavatn and dig a canal from the northern part of the lake down to Grafarvogur where a hydro power plant was to be built.
This was however never realized and instead a hydro power plant was built in Elliðárdalur that was inaugurated in 1921 when King Christian X of Denmark laid a cornerstone during his first visit to Iceland. The Elliðaár power plant is still operational and is a landmark of its own. The first hydro power plant in Iceland, Fjarðarselsvirkjun, started production in 1913 in Seyðisfjörður.
There is a little forrest by Lake Rauðavatn, Rauðavatnskógur, that makes the area even more attractive. Rauðavatnsskógur is frequently visited by the students of Selásskóli which is a neigborhoud elementary school.