Well, You need to render out all the main layers separately, and with any method you'd like, put them onto each other. The cool thing comes with the layer (sprite, texture plain, really whatever...) which has the water on, the pro solution with endless possibilities is manipulating the texture with memblocks (the built in example code in the help file is perfect with some customization!), or you could make the water plain not a single poly plain, but a plain with many rows of polygons. And then manipulate the edges' positions with the vertex commands OR simply by bone animation.
These are all real fast methods.
Though rendering animation frames for the water is also not out of the question if done right. OF course by finding the lowest possible frame count where you can achieve a perfect loop. Since it is animated and in the background, if you half the resolution for only the water, no one will notice.
The official memblocks showcase example right from the DBP help:
rem Memblocks Showcase
rem Requires 640x480x16 fullscreen
sync on : sync rate 60 : hide mouse
rem Create array for wavedata
dim wave_table(72)
for i = 1 to 72
wave_table(i) = int(sin(i*5)*20.0)
next i
rem Load the first image and store it in memblock 1
load bitmap "groovy.jpg",0
make memblock from bitmap 1,0
make memblock from bitmap 2,0
rem Required variables
linesize = 640 * 2
topI = 0
rem Main loop
while mouseclick()=0
rem Wrap topI variable
topI = topI + 1
if topI > 72 then topI = 1
rollingI = topI
rem For each vertical position
for i = 0 to 479
rem Calculate positions
fromposition = 52 + (i*linesize)
toposition = fromposition+(wave_table(rollingI)*2)
rem Copy data from one area of memblock to another memblock
copy memblock 1,2,FromPosition,ToPosition,1200
rem Advance roll effect
rollingI = rollingI+1
if rollingI > 72 then rollingI = 1
next i
rem Update screen with memblock containing wave-bitmap
make bitmap from memblock 0,2 : sync
rem End loop
endwhile
rem Remove the memblocks before we exit
delete memblock 1
delete memblock 2
(i copied it here just for a quick look, check your help files, so you can see it in action!)