I forgot if the main character (MC) is banished, but he created a village with a castle that has a lake in the back. Later on, a princess mermaid moves in and says that she will be the wife of the MC. The mermaid and the villager/citizens started doing trades. I'm not sure if it's correct, but there was a scene where the MC routed the water river to the castle's moat for protection.
The MC is still a kid. The mermaid is also still a kid with his father and the rest their mermaid citizen who moves in at the lake. The story is similar to farming in another world.