Northern North Dakota (with a couple of visits to the Fargo/the Twin Cities)
The less-than-postcard-perfect setting kind of mirrors the themes and situations going on in the novel, putting some flashes of beauty and happy times amidst a sea of sadness. When Albertine looks out over the landscape on her ride back from school to the reservation where most of the action takes place, for example, she sees plenty of beauty, but there's also a dullness and depression about what she sees as well:
All along the highway that early summer the land was beautiful. The sky stretched bare. Tattered silver windbreaks bounded flat, plowed fields that the government had paid to lie fallow. Everything else was dull tan—the dry ditches, the dying crops, the buildings of farms and towns. Rain would come just in time that year. Driving north, I could see the earth lifting. The wind was hot and smelled of tar and the moving dust. (1.2.17)
Yeah, we're not talking about a vibrant, flowery scene here—it's pretty, but it's also dry and smelly.
When Albertine arrives at the family house and has to reacquaint her elderly grandfather with the place, the scene there strikes that same balance. Albertine clearly has a lot of warm and fuzzies for the place, but you also get the picture that it's not in super great shape because her aunt, Aurelia, isn't really able to keep up with all the yard work:
Whenever he came out to the home place now, Grandpa had to get reacquainted with the yard of stunted oaks, marigold beds, the rusted car that had been his children's playhouse and mine, the few hills of potatoes and stalks of rhubarb that Aurelia still grew. She worked nights, managing a bar, and couldn't keep the place as nicely as Grandpa always had. Walking him slowly across the lawn, I sidestepped prickers. The hollyhocks were choked with pigweed, and the stones that lined the driveway, always painted white or blue, were flaking back to gray. So was the flat boulder under the clothesline—once my favorite cool place to sit doing nothing while the clothes dried, hiding me. (1.2.72)
So, again, there's still lots of beauty (and there are definitely some great memories), but you also get the sense of decay and depression in the flaking paint and the overgrown yard.
In case you don't believe Albertine on her own, check out Marie's reflections on her surroundings while she was doing her tour with the crazypants nun. Although people often thought the convent was a pretty place, Marie "saw the homelier side," including the "cracked whitewash and swallows nesting in the busted ends of eaves" and "the boards sawed the size of broken windowpanes and the fruit trees, stripped" (2.1.6).
She even kind of thinks of the convent—and the area that surrounded it—as "the end of the world for some. Where the maps stopped. Where God had only half a hand in the creation. Where the Dark One had put in thick bush, liquor, wild dogs, and Indians" (2.1.6). If you ask us, it must be pretty brutal to believe the Devil may have singled out your home region for his special attentions—to say nothing of the suggestion that "Indians" are a blight in the same way that wild dogs and alcohol are.
Anyway, you get the point: Erdrich (and her characters) paints a pretty bleak picture of the characters' surroundings. There are flashes of beauty, of course, but overall it seems kind of depressing.