Here's a diy way of doing it with EQ ( filter in the audio object ). So when you move to water you want the filter to be on. Now the settings:
Tag "Water Muff" <img src="{SMILIES_PATH}/icon_e_wink.gif" alt=";)" title="Wink">
Type: Low pass
Frequency: Try anything between 150 to 500 and see what sounds best for you. Sounds like a lot but you can jump every 20hz.
Detune: to your liking
Q: can leave 1
Gain: 0
Mix: 100, or less depending if you want to retain a bit of those mid and high frequencies.
Hope that will help!
EDIT@ Ah Yes, that's advanced audio.
Ok, here's another way using two tracks: one normal and one muffled.
1st step - Prepare muffled version of the track.
Download Reaper http://www.reaper.fm/ . It's free and it's very good. And comes with plugin suite. Install and run. Press "Insert" and select your audio file. Follow couple of steps and you should end up with a track and a wave form. Press space to play. If there is no sound you got to set it up in the preferences. If you never used DAW before you might want to check Reaper forums or manual to see how its done. Once the sound works, click the gray thin bar of the track in the mixer. Look for EQ. From drop down select low pass ( or high cut ) and move the swipe slowly the band towards left side. You'll be cutting off the frequencies. Once you're happy with the sound, export the file ( under file in top tab menu ).
2nd Step
Load bot files to construct. Give them different tags. Then play them simultaneously, but mute the muffled track. Now whenever you're in water, mute the original track and mute the muffled track. You could also program slight transition. For that lerping volume slider is usefull ( lerp is to transition between two values within certain time if I remember correctly; always got to remind myself those things! )
Ok, hope that will help.