The pre-disturbance landscape of northern Alberta is comprised of a mosaic of upland-wetland complexes. As such, these landscapes have become the focus of recent, mandatory reclamation efforts in the region. Here we evaluate the reclamation performance of one of the first constructed upland-peatland complexes (Nikanotee Fen Watershed) through a functional-based, ecosystem-scale approach focused on carbon dynamics and water use efficiency (WUE). Growing season observations during the initial seven years following construction were measured using the eddy covariance technique and paired with multispectral imagery to capture ecosystem evolution. Results indicate ecosystem functionality is closely linked to plant growth and establishment. The fen quickly evolved from a bare-ground, carbon source in year 1 to a sedge-dominated, sink by year 3. The slower growth rate of trees coupled with dry edaphic conditions in the upland resulted in net carbon losses during the study period but is on trajectory towards become a carbon sink in near future. WUE rates in both the fen and upland show a marked increase once vegetation becomes well established. Notably, from year 3 onwards, fen WUE rates remain relatively stable despite hydroclimatic fluctuations between years. Stable WUE rates are indicative sufficient hydrological self-regulation. As a result, there is adequate plant-water availability, and plant function in the fen is not solely dependent on precipitation inputs – increasing the systems resilience to intervals of periodic water stress. Overall, assessment of the carbon and water dynamics during early-development suggests the constructed system is evolving towards becoming a self- sustaining, carbon-accumulating, functional ecosystem.