When populating a CAW world with Nraas's mods, I noticed there is an option called "Mermaid" under "Set service" interaction. I wonder can I add mermaid NPC's to CAW safely? I read on Wiki that ghosts and mummies can cause problems if added.

If you mean the NPC Mermaid household that show up at dive lots they would be completely irrelevant to add if you don't have dive lots. As you'd never get a chance to meet them in order to call them onto land to interact outside of dive lots.

If you're talking about random townies spawning as mermaids this is a bad idea. They'll probably die of dehydration after a sim week. They always do in my game.

But, if you have dive lot(s) in your world, I don't see how it can break your game to add the NPC mermaid household.

I would ask about this on the nraas site, it's a bit technical, but they should know if the mod works with it at all, and where they come into play.

I know zip about mermaids, but NPC's are the one you call for or they do some work in your town like bartenders or something. I don't know if that is the mermaids living on divelots, but it could be plausable I guess.