The ability to draw water streams is unlocked in Chapter 4-1 "The Scared Pool".
Look for the blue draw points and simply draw water streams by equipping your magic marker with
and then press and hold
and move the
to draw (Doesn't need to be full length). Whilst still holding
press and hold
to cut the water streams and then repeat 199 more times.You will most likely get this through progression in the game but if you wish you can use the same point over and over, you can see your progress via the consoles achievement app
Heres a video