Success Factors and Challenges: Implications of Real Options Valuation of Constructed Wetlands as Nature-Based Solutions for Wastewater Treatment

Abstract

Constructed wetlands (CWs) are engineered water treatment systems that mimic the features and functions of natural wetlands. As a nature-based solution (NBS) for wastewater treatment, CWs are sustainable and cost-effective while providing various ecosystem services. However, their widespread application faces several uncertainties, particularly in developing countries. This study aims to analyze the success factors and challenges in implementing CW projects. Using the case of successful CWs in Bayawan City in the Philippines, this study surveyed 270 household heads from the community benefiting from the CWs and interviewed various CW stakeholders, including the project planner, management, community leader, social workers, and CW workers. The results showed that 89% of the respondents were aware of the existence of CWs in the community and 73% believed in their long-term sustainability. Among the identified factors for the successful implementation of the CW project were government support (43%), good governance (32%), and public support (14%). On the other hand, the implementation was challenged by improper maintenance (63%), overcrowding in the community (11%), foul smells (4%), funding (4%), and climate-related uncertainties, including natural calamities (4%), flooding (7%), earthquakes (4%), and sea level rise (11%). The implications of these success factors and challenges were discussed in the application of real options valuation to CW projects by incorporating the identified uncertainties into flexible decision making in the scaling up and widespread implementation of a more sustainable NBS to water resources management.