In a medium saucepan, combine water, granulated sugar, honey, cinnamon stick, and orange peel. Bring to a boil, then simmer for 10 minutes. Remove from heat and cool.
In a food processor, pulse the toasted walnuts, ground cinnamon, and ground cloves until finely chopped. Set aside.
Thaw the phyllo dough in the refrigerator overnight or at room temperature. Unroll and cover with a damp towel.
Preheat oven to 350°F (175°C). Brush a baking dish with melted butter and layer 8 sheets of phyllo, buttering each sheet.
Spread half of the walnut mixture over the phyllo layers. Continue layering phyllo and buttering, finishing with another 8 layers on top.
Cut the baklava into diamond or square shapes with a sharp knife.
Bake for 45-50 minutes until golden brown. Immediately pour the cooled syrup over the hot baklava.
Let the baklava soak for several hours or overnight for the best flavor.
