Please don't mind the tileset's background it's a placeholder :3
As for water I have no idea how to improve on that, will work on it.
it's a combination of the background, and the fact that it just turns solid blue after a while.
if you had it shade darker as it got lower, or maybe had bubbles in it or something, it'd be a bit more clear.
might I also suggest working on perhaps making the cliffs a little less square?
maybe some jutting rocks, or a rocky incline for edges?
oh, and the spriting work is absolutely superb, as is the character art.
I can't CG for crap, I'm gonna have to practice before I work on my next project =x