|The Finished Effect|
Step 1:Delete the default Cube and the Lamp by selecting and hitting delete followed by clicking the on screen prompt. You will not need these in your scene.
Step 2:Add a Plane and a Sunlight (placement doesn't matter for sunlight) through the Add tab, followed by scaling the plane up by pressing the S key while it is selected. The sun will create the reflection and all lighting.
Step 3:Select the Sunlight, and then go into the Sun Data tab which is a little sun icon where Materials would be, check the Sky box and Atmosphere box, then change the Factor of the sky to 0.5. This gives the background a realistic sky when you render the scene.
Step 4:Select the plane and enter the Materials tab and add a new material, change the Specular type of the plane to Blinn and change the specular Intensity of the highlight to 0.2. Then check the Mirror box of the plane and in the mirror dropdown, set the Reflectivity to 1.0 then set the gloss amount to 0.75.
Step 5:Enter the Texture tab and add a new texture, and under Mapping change the X, Y & Z size to 7.0, then uncheck the Color box under the Influence tab, then under the Geometry heading change the normal to 0.1.
Step 6:Go to the world tab and check the Ambient occlusion box and set it to 0.3.
Step 7:Enter Edit mode and select the plane, then Subdivide it 7 times. This is to give it more Geometry for the Displace modifier to take effect. We will add this in the next step.
Step 8:Now enter the Modifier tab and add a Displace modifier and click the little texture box and select texture from the dropdown, now enter Object Mode and from the dropdown click texture, then change the Strength to 0.02.
Step 9:Under the Object tools menu on the left, change the Shading to Smooth.
If you followed my instructions correctly you should end up with something like this, my camera has been fixed into a suitable position for the effect to show it off, I also added a Monkey and an Icosphere from the Add tab to give the effect of floating objects. You don't have to do this.
Now hit F12 for the final render. Congratulations now you know how to make water effects for your renders.