Yes, from I've read it's definitely the issue of soil. The island was completely deforested a long time ago and the unprotected soil has completely eroded since

Yes, from I've read it's definitely the issue of soil. The island was completely deforested a long time ago and the unprotected soil has completely eroded since then (the same thing also happened in Scotland and Sicily ?). There are some recent initiatives to reforest Iceland, but it will understandably take many decades to repair the damage.