Water isn't a theme Element in SK, but our daily Mist is, assumably, water vapor, and Ice is an Elemental theme, so it is implied that there are water sources/stores somewhere...
Are there levels that feature puddles/ponds/streams/tanks of water? Frozen or not...
Mist is implied as floating energy, mist form. Thus, the energy collected in mist form is called mist.
There's water in the wishing well, and the totem you hit with something to spawn slime/coins.