A “water hazard” is any sea, lake, pond, river, ditch, surface drainage ditch or other open water course (whether or not containing water) and anything of a similar nature on the course. All ground and water within the margin of a water hazard are part of the water hazard.
When the margin of a water hazard is defined by stakes, the stakes are inside the water hazard, and the margin of the hazard is defined by the nearest outside points of the stakes at ground level. When both stakes and lines are used to indicate a water hazard, the stakes identify the hazard and the lines define the hazard margin. When the margin of a water hazard is defined by a line on the ground, the line itself is in the water hazard. The margin of a water hazard extends vertically upwards and downwards.
A ball is in a water hazard when it lies in or any part of it touches the water hazard. Stakes used to define the margin of or identify a water hazard are obstructions.
Now watch Padraig Harrington explain the procedures in the video below