Sorry, there is no way of deleting your elf city short of waiting the months it takes of non activity for the game to auto delete your city for inactivity..
Plus you can not start the game as a dwarf.. Just human or elf.. The dwarfs are a chapter further down the knowledge tree that your initial race will eventually turn in to as you progress thru the game... Both humans and elves turn into dwarves then fairies then orcs then wood elves then sorcerers..
There is very little difference cosmetically between a human/dwarf city or an elven/dwarf city, with the most noticeable change being building facings.
If you wanted to make a human city you could always make one on one of the 4 other worlds