This entire valley was created in one night.

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On June 10, 1886, a volcano known as Mount Tarawera erupted. The force of this eruption created a line of craters that now forms a valley. This valley is now known as Waimangu. An interesting point about this valley is that all of the vegetation and animal life has developed since 1886. When the volcano erupted, all plants and animal and birdlife was destroyed.  In a lot of volcanic areas, the eruptions and other activity was thousands or millions of years ago. In this case, the volcanic activity, which created such a huge disruption, occurred just over a hundred years ago. So, the vegetation and the animal life still is just at the very beginnings of recovery. This picture is from the beginning of the walk looking east towards Mount Tarawera. That's Mount Tarawera in the background. The body of water visible in the center is a spring, roughly midway through the valley between the starting point of the walk and Lake Rotomahana, which is at the foot of the mountain.

From one of the information boards located where the above photo was taken:

The Mount Tarawera eruption on the 10th of June 1886 is the largest volcanic eruption to have occurred in New Zealand since European settlement. The outbreak began on Mount Tarawera about 2 a.m., after a series of gradually intensifying earthquakes. Over the next few hours, the eruptions spread northeast and southwest from the site of the initial outbreak and from about 3:30 a.m. a series of craters, the Tarawera Rift, extending nearly 16km along a line from here to the north eastern end of the mountain, were simultaneously in eruption. The climactic stage of the eruption was over by about 5:30 a.m.  Seven of the craters formed in 1886 make up the Waimangu Volcanic Valley, and many others formed the basin now occupied by Lake Rotomahana.

While the immediate cause of the eruption was rising red -- hot molten basaltic magma, which reached the earth's surface along almost the whole length of the Tarawera Rift, a large part of the energy dissipated during the upheaval was contained in very hot water bodies that comprise the reservoir fluids that had fed the famous hot springs at Lake Rotomahana.

During the eruption, very hot material swept across the country, a completely extinguishing all life in this area, and covering the landscape with a thick blanket of ejecta.

The hot springs, geysers, and other surface geothermal features of the Waimangu hydrothermal system have developed in and around the craters formed during the 1886 eruption. But beneath the surface, this system extends from here towards Mount Tarawera, and also southwards towards rainbow Mountain, and in all probability that exceeds many tens of square kilometers in area.

 

A few more images just to provide a sense of the force of the volcanic eruption. This picture is looking at the same body of water visible in the picture above. But we are now looking from the other side of the water back towards where the walk begins. The land of this area was originally fairly flat, with small rolling hills. Most of the land was at the elevation visible at the top of the ridge line at the top this picture. During the volcanic activity of that one night, the land collapsed into a series of craters. This body of water is one of the craters.

Here's another image that demonstrates the force of the volcanic eruption. This is a map prepared in 1893 that shows the outlines of what were two lakes at the foot of Mount Tarawera. The heavy red lines indicate the shores of the lakes (Rotomahana and Rotomakariri) before the eruption. The shaded blue area shows the new shores of the merged lake Rotomahana in 1893, 7 years after the eruption. Running through the center of the image from the lower left side to the upper right side is a dotted red line. This line traces the approximate center of the valley that was created by the volcanic activity ("The Tarawera Rift").

 
2. This is the Southern Crater. It is approximately 50m deep, and was created in that one night in 1886. At the center of the crater is the 2m deep Emerald Pool. Unlike the other bodies of water in the valley, is a "cold lake". It is called a cold lake because it is primarily rainwater. The other bodies of water in the valley are fed from hot springs underneath, and the combination of heat and acidity render those bodies of water fairly inhospitable. As this lake is primarily rainwater that has settled in the bottom of a crater, it can support a larger variety of life The main reason for the coloration is for the plant species growing in the water.
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This is the Echo Crater, with the Frying Pan Lake at the base. This crater was also created on the 10th of June 1886. While the crater itself was created in 1886, the lake at the center was created by a subsequent volcanic eruption, in 1917, that deepened the crater, and opened some vents that brought water to the surface.  This deeper crater started to accumulate water and the result is what we see now, the Frying Pan Lake. While this looks like a lake, in reality it is actually the world's largest hot spring. Although the water at the surface is fairly stable, the underwater spring's turbulence is masked by the lake's depth, at 6 m. The temperature of the water at the surface is about 55°C, or 131 °F. The water is very acidic, with an average pH of 3.5.
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The steam emanating from the water's surface is not because of a temperature differential, but actually the release of carbon dioxide and hydrogen sulfide gas. At the base of the lake, near the vents, the water is indeed boiling. However, because of convection and radiation, the water temperature near the surface is much cooler.
 
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Here's a movie of the vapors coming off the water.  ( A new window will open with the clip)
 

These are the Cathedral Rocks. This formation was originally named Gibraltar Rock. However, the 1917 eruption radically changed its shape, to the point where Cathedral Rocks was a more appropriate name. The lava forming these rocks about 60,000 years old, much much older than the nearby Mount Tarawera. The rocks also have vents that release carbon dioxide and hydrogen sulfide gas.

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The Frying Pan Lake overflows into this small creek. The temperature is about 50°C, and the water flows at about 110 L per second.
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This is really not pure mountain water, as it contains antimony, molybdenum, arsenic, and tungsten. The mixture of these metals, along with the algae that's growing nearby, create a range of colors on the rocks.
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In the middle of the small stream coming down from the Frying Pan Lake, are these two isolated hot springs. The coloration is a result of both the water coming from the Frying Pan Lake, and also the mineral-rich waters coming up from these two springs.
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Video of one of the small surface springs. 
 
Another video of the water percolating up through the surface, and draining into the stream. (sorry about the noise, it was windy, & I don't have the editing SW on my laptop to cut out the sound.)
 
Another boiling surface eruption of a spring, two angles:

Video 1

Alternate angle

These terraces began forming in 1975 when a new spring started to erupt. When the spring began to erupt, scientists thought that this would be a precursor for a larger seismic event. So, access to the area was restricted for a while. However, this area has remained fairly stable since then.

Inferno Crater Lake:

From the Waimangu Wanderer's Guide:

This steaming and usually pale blue jewel of Waimangu lies in a crater blown from the side of Mount Haszard in the 1886 eruption. Lake level follows complicated rhythmic cycles with shallow recessions occurring every few days and/or deeper recessions at longer intervals. The top of the white silica deposit marks overflow level. Its most common behavior is to overflow for two or three days, recede about 8m during some 15 days, partly refill over three to four weeks, oscillate for a while, and then start to overflow again. The lake is roughly trumpet shaped. Its depth when full is 30 m. Overflow temperatures can reach 80°C (176°F). The the water is highly acidic with a pH sometimes of 2.1. Inferno Crater Lake is the largest geyser-like feature in the world, although the geyser cannot be seen since it plays at the bottom of the lake. It has a unique relationship with Frying Pan lake. When Inferno crater lake is overflowing there's a decrease in the discharge for Frying Pan Lake and when Inferno Crater Lake is receding the discharge from frying pan lake is greater than usual.

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When Inferno crater overflows, it cascades into this small pool.  The white material around the pool is silica deposits from the water.  The overflowing water, because it is so acidic, generally kills off all the algae in the area.

 
26. This and 27, below, are the same area from different angles.
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27.  Marble Terrace and Buttresses

From the visitor's guide:

These buttresses and the sinter flat beyond them are composed of similar material to the pink and white terraces that were destroyed in 1886 Mount Tarawera eruption. Terraces are formed by silica depositing out of solution building in successive layers over time. The silica-rich water is supplied from large hot spring in Iodine Pool so named for the brown coloring on its rocks and banks. The water leaves Iodine Pool at an average of 97°C to flow across the Marble Terrace in shallow waves. Marble Terrace and its buttresses are growing over a stream terrace formed when Lake Rotomahana (at the far end of the walk, at the base of Mount Tarawera) was at a higher level in the 1970s and the stream frequently flooded this area. The large hot spring which flows into Iodine Pool can be seen at the apex of the terrace across the road.

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28. Warbrick Terrace

From the Visitor's guide: 

Warburg Terrace is a set of multicolored fast-growing silica platforms forming over an old stream terrace in a similar way to Marble Terrace. In addition, algae in recent years have assisted in the silica deposition to build a dam across the warm stream draining through the crater. A further series of ripple terraces are now forming at right angles to the original ones.

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The ripple terraces forming at right angles to the silica terraces,
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This spring is just upstream of the ripple terraces.
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Lake Rotomahana and Mount Tarawera

Several views of the volcano and the lake which was greatly expanded by the 1886 eruption, per the map above.

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Here's the official site: