In the starter map, once you are allowed to move freely, behind your house you will notice a farmer standing by a big water collector barrel. Under the barrel are 2 sponge cubes, pick one up, if you follow the left side of the map and move past the "5/7 achievement" (5 board with 9's) there is an inlet with a pipe and a button you can press. Place a sponge under the pipe and then go press the button that triggers water to come out. *Likewise you can take the sponge to the small water pond with 2 purple glow flies hovering over it(thanks guys). The sponge will absorb water, now take it back to the big barrel, climb up the rock so you can drop the sponge inside the tank and drop it in. Now hop over the barrel and smack the tree, leaves will fall in. There is a button right next to the farmer at the base of the big barrel, pressing it will pour water into a bucket from which you can drink "X"..
You'll gain permanent 10 HP and the achievement.