May I ask if you based this on an old project file, or one that you got from somebody else? The reason I ask is that I see some parallel lines in the water. Make sure that you enable "microvertex jitter" in the renderer if you are working from old project files.
Microvertex jitter has been enabled in the default project for quite some time, so the reuse of old projects is the only reason I can think of for why I keep seeing this problem.
Matt