High population growth, a lack of wastewater treatment plants and poor wastewater management are major challenges in wastewater management in Timor-Leste (East Timor). One of the approaches of the government of Timor-Leste is to separate wastewater into greywater and blackwater from domestic, commercial, residential, and industrial areas. Three methods were applied to obtain insight into the locations and discharge of grey- and blackwater to develop a cost-effective wastewater strategy: a field survey and data collection, interviews with over 130 participants from local authorities and communities, and the open-source mapping of locations of wastewater discharge. This research concluded that 47.7% of the grey wastewater is discharged into open sewers connected directly to the sea. Most communities discharge their wastewater directly due to the absence of wastewater management, policies and regulations, and lack of communities’ understanding of the possible health impacts of wastewater. The impact of poor wastewater management showed that most of the children in these communities have suffered from diarrhea (73.8%), and in the rainy season, there is a high possibility of infection with waterborne diseases. The literature review, field mapping, and interviews show that there is high demand for a cost-effective wastewater strategy for health improvement. Low-cost nature-based solutions such as constructed wetlands and bioswales can be implemented with local skills and materials to improve the wastewater situation and address other challenges such as biodiversity loss, heat stress, drought, and floodings. These installations are easier to rebuild than large-scale grey infrastructure given the multiple hazards that occur in Timor-Leste: landslides, earthquakes, strong wind, and pluvial and fluvial floodings, and they can serve as coastal protection.