Water is a dandy incompressible liquid, but that is where the good points end. If you use it in a hydraulic circuit the following will happen: 1. When put under negative pressure gasses will evolve from the water. This will result in soft actuation as the gas is compressible. 2. The system will be subject to freezing if left in a cold environment. 3. Metal fittings will likely rust. 4. Hydraulic oil filters will likely clog. 5. You will wind up with one expensive repair bill.