It's easy, and you wouldn't do it with water.
There's a command called "plraddair=x", similar to "plraddhealth=x". To take
away air, you would say, for instance, "plraddair=-1", so everytime the script passes that state, it takes away one unit of air. This is exactly what a hurt zone does for health. You would just add the script to a trigger zone that covers the area you need to be unbreathable, and voila, you're done.
Here's the script you'd need.
;Artificial Intelligence Script
;Header
desc = Jiffy's 'No Air' Script
;Triggers
:plrwithinzone=1:state=1,plraddair=-1
More info soon!