I want water to be a gameplay object in my game. The player should be able to take in in a bucket and tip it out somewhere in the world. Water should flow in some way so that it can be used to build rivers and transport game objects or to create particular apparatuses. It's comparable to the game Minecraft where you can build cool things involving water or just create just some small waterfalls. However, there my game isn't made out of blocks so there is smooth terrain.

In most games water is simply placed at a given height. That works well for lakes and Oceans, but for flowing rivers and usage in apparatuses this concept is to limited. In Minecraft water is implemented as a block which spreads inside the blocky grid, too. That approach is a bit more what I need to realize my idea but I don't use these blocks and therefore such water simulation would look very misplaced.

What concepts of representing water which the player can interact with in the mentioned manners are there? How can I realize oceans, rivers, buckets and so on with one general approach? There shouldn't be an infinite amount of water. If you fill your bucket, the volume of the lake the water was taken from should decrease unnoticeable. Moreover if the player would place water somewhere that volume of water should never go missing.