James- I think this is a very interesting diorama undertaking. I think you have the texture of the sides of the bank spot-on- the ripples really do look like earth shifted by water during heavy rainfall. The color of it and the addition and color of large and small rocks also adds to the overral impression.
However, compared to the exposed rocky area, the grass is too mono-tone- some variation in color and perhaps the type of grass would make it look more natural.
As for water I tend to use Deluxe Materials Still Water- it comes in a tub- basically you put the tub in a bowl of boiling water and it melts, making it pourable- then pour it and it begins to set within minutes. The drawback is that it is quite thick and tends to, when applied without a tint, appear very 'bubbled'. The good thing about it is its fairly cheap and if you want to add movement to it you can simply use a heat gun (or a hairdryer I would think) to heat it up and create whatever effect you need. Another good thing about this stuff is that when set, it can simply be peeled away if you are not happy with it- it doesn't leave residue either.
The other water product I use is Vallejo Still Water- pretty much the opposite of the Deluxe Materials product- it is very thin and very runny and takes a fair while to set. The advantages are that it is easy to use- just pour it on straight from the bottle in thin layers and build it up as you wish.
It probably goes without saying but I would recommend experimenting a bit with any product you choose before comitting it to good work. If I'm planning on using something like these water products I will usually do a quick mock-up of the conditions in which it will be used and see how it works.
Anyway, I hope this helps and good luck with this build
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