You could try water blocks. Make a box, texture it with your water texture (if it's not a PNG with alpha channel, then use GHOST OBJECT) and scroll it as necessary for effects. Scale and position it so that it fits approximately in the area you want a body of water, then turn culling off. You can add particle effects and all that fun stuff afterward, as well as swimming physics.
Because you can look from the inside out of the box when it's not culled whenever the camera is in the box and you're looking out everything will have the bluish (or whatever color your texture is) tinge. The problem of course, it that you'll look down and probably will see the sea floor on blue-ified. Use a textured plain in front of the camera, or any other camera filter effects you can think of.
Be sure to add plenty sound effects, and maybe air bubble particles for when the character is underwater for too long or whatever.
If you're talking about interactive water where it splashes and conforms around you, then all you can probably do is test for collision with the moving water and add lots of fun particles.
I'm going to eat you!
