Sedimentation in Rawa Pening Lake has become a major environmental challenge, reducing aquatic ecosystem functions while creating opportunities to recover sediment as a valuable agricultural resource through a circular economy approach. This study analyzed the determinants of farmers' adoption of Rawa Pening sediment-based soil block growing media and its implications for sustainable horticultural production in Temanggung Regency, Indonesia. A mixed-methods approach combined a cross-sectional survey of 60 chili farmers with in-depth interviews involving six key stakeholders representing producers, distributors, and government institutions. Quantitative data were analyzed using binary logistic regression, while qualitative data were examined through thematic analysis to strengthen interpretation. The logistic regression model demonstrated excellent performance, with a significant Omnibus Test (χ² = 66.521; p < 0.001), satisfactory Hosmer–Lemeshow goodness-of-fit (p = 1.000), and a Nagelkerke R² of 91%, indicating strong explanatory power. Institutional support (OR = 12.691; p = 0.041), ease of use (OR = 4.163; p = 0.039), government support (OR = 2.994; p = 0.044), and supply chain effectiveness (OR = 3.738; p = 0.032) significantly increased adoption likelihood. In contrast, economic perception, sustainability, information access, and raw material availability were not statistically significant. These findings suggest that successful circular agricultural innovations depend not only on the economic value of recovered resources but also on strong institutions, supportive policies, and integrated supply chains. Transforming lake sediment into soil block growing media represents a practical resource recovery strategy for advancing sustainable horticultural production and strengthening circular economy implementation.
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