Water simulation is a big topic so this blog will show a few example of some of the techniques people use to make water in computer look like the real thing. First is product of a research: "Real-time Realistic Ocean Lighting using Seamless Transitions from
Geometry to BRDF" (E. Bruneton, F. Neyret, N. Holzschuch, Eurographics
2010) and FFT-based ocean synthesis method of "Simulating Ocean Water" (J. Tessendorf, Siggraph 2005.

http://www.gamedev.net/page/resources/_/technical/graphics-programming-a...

For those of you who want to learn more about the math:
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CC0QFjAB&url=http%3A%2F%2Fgraphics.stanford.edu%2Fpapers%2Fwater-sg02%2Fwater.pdf&ei=dMPZTsaJNMqQiAKrv-nbCQ&usg=AFQjCNFKTx-QohVBVqG39eFVczHEoVUB9A