Water Totem

The Water Totem is required for a shaman to use water-aligned totems. If no Water Totem is in your inventory, you cannot use water-aligned totems. All relic slot totems count as Water Totems, and if one is equipped or in the shaman's inventory, the Water Totem item is not needed. The Water Totem can never be destroyed, however, but if the character has a relic totem then the Water Totem can be placed in the character's bank instead of taking up inventory space.

Source
This item is a quest reward from the following quests:

Water Totem as a Spell Component
A Water Totem must be in a shaman's inventory to create the following Water-based totems:


 * Disease Cleansing Totem
 * Fire Resistance Totem
 * Healing Stream Totem
 * Mana Spring Totem
 * Mana Tide Totem
 * Poison Cleansing Totem