The falls are on a short spring-fed stream that plunges into a small canyon on the south side of the Niobrara. As the canyon is narrow and sheltered from direct sunlight, it is much cooler than the surrounding landscape; this allows a unique set of flora to grow that is atypical for the Sand Hills of Nebraska. The canyon is home to Paper Birch and an endemic hybrid grove of quaking aspen (Populus tremuloides) and bigtooth aspen (P. grandidentata).
During the Wisconsin glaciation, which ended around 10,000 years ago, north-central Nebraska was much cooler than it is today. The ice age climate supported boreal forest trees like birches, spruces, and aspens, all of which currently predominate in Canada. As the glaciers retreated, so did the boreal forest, which is ill-suited for hot, dry summers. However, the cool canyons along the Niobrara sheltered some of these trees. The spruce trees did not survive in Nebraska; the nearest extant population is in the Black Hills of South Dakota. Protected by the cool microclimates of the small canyons that feed into the Niobrara River, a small population of paper birches and aspens survive. The continued survival of these trees is threatened by warming temperatures. The paper birch population around Smith Falls is not currently reproducing, and may soon die out.