Index: src/water_map.h
===================================================================
--- src/water_map.h	(revision 11274)
+++ src/water_map.h	(working copy)
@@ -27,6 +27,8 @@
 
 static inline WaterTileType GetWaterTileType(TileIndex t)
 {
+	assert(IsTileType(t, MP_WATER));
+
 	if (_m[t].m5 == 0) return WATER_TILE_CLEAR;
 	if (_m[t].m5 == 1) return WATER_TILE_COAST;
 	if (IS_INT_INSIDE(_m[t].m5, LOCK_MIDDLE, LOCK_END)) return WATER_TILE_LOCK;
@@ -35,11 +37,19 @@
 	return WATER_TILE_DEPOT;
 }
 
+/** IsWater return true if any type of clear water like ocean, river, canal */
 static inline bool IsWater(TileIndex t)
 {
 	return GetWaterTileType(t) == WATER_TILE_CLEAR;
 }
 
+static inline bool IsSea(TileIndex t)
+{
+	if (GetWaterTileType(t) != WATER_TILE_CLEAR) return false;
+	if (!IsTileOwner(t, OWNER_WATER)) return false; // 'Human' built water = canal, not sea
+	return true;
+}
+
 static inline bool IsCoast(TileIndex t)
 {
 	return GetWaterTileType(t) == WATER_TILE_COAST;
@@ -52,7 +62,11 @@
 
 static inline bool IsClearWaterTile(TileIndex t)
 {
-	return IsTileType(t, MP_WATER) && IsWater(t) && GetTileSlope(t, NULL) == SLOPE_FLAT;
+	/*
+	 * This used to check TileSlope == flat too.
+	 * But none of the uses actually requires flat water, just (clear)Water (canal, river, sea)
+	 */
+	return IsTileType(t, MP_WATER) && IsWater(t);
 }
 
 static inline TileIndex GetOtherShipDepotTile(TileIndex t)
@@ -109,6 +123,7 @@
 
 static inline void MakeCanal(TileIndex t, Owner o)
 {
+	assert(o != OWNER_WATER);
 	SetTileType(t, MP_WATER);
 	SetTileOwner(t, o);
 	_m[t].m2 = 0;
Index: src/saveload.cpp
===================================================================
--- src/saveload.cpp	(revision 11274)
+++ src/saveload.cpp	(working copy)
@@ -29,7 +29,7 @@
 #include "strings.h"
 #include <list>
 
-extern const uint16 SAVEGAME_VERSION = 81;
+extern const uint16 SAVEGAME_VERSION = 82;
 uint16 _sl_version;       ///< the major savegame version identifier
 byte   _sl_minor_version; ///< the minor savegame version, DO NOT USE!
 
Index: src/station_cmd.cpp
===================================================================
--- src/station_cmd.cpp	(revision 11274)
+++ src/station_cmd.cpp	(working copy)
@@ -2088,7 +2088,7 @@
 		DrawTramCatenary(ti, axis == AXIS_X ? ROAD_X : ROAD_Y);
 	}
 
-	if (IsBuoyTile(ti->tile) && (ti->z != 0 || !IsTileOwner(ti->tile, OWNER_WATER))) DrawCanalWater(ti->tile);
+	if (IsCanalBuoyTile(ti->tile)) DrawCanalWater(ti->tile);
 
 	const DrawTileSeqStruct *dtss;
 	foreach_draw_tile_seq(dtss, t->seq) {
Index: src/water_cmd.cpp
===================================================================
--- src/water_cmd.cpp	(revision 11274)
+++ src/water_cmd.cpp	(working copy)
@@ -458,7 +458,7 @@
 	switch (GetWaterTileType(ti->tile)) {
 		case WATER_TILE_CLEAR:
 			DrawGroundSprite(SPR_FLAT_WATER_TILE, PAL_NONE);
-			if (ti->z != 0 || !IsTileOwner(ti->tile, OWNER_WATER)) DrawCanalWater(ti->tile);
+			if (IsCanal(ti->tile)) DrawCanalWater(ti->tile);
 			DrawBridgeMiddle(ti);
 			break;
 
@@ -518,7 +518,7 @@
 {
 	switch (GetWaterTileType(tile)) {
 		case WATER_TILE_CLEAR:
-			if (TilePixelHeight(tile) == 0 || IsTileOwner(tile, OWNER_WATER)) {
+			if (!IsCanal(tile)) {
 				td->str = STR_3804_WATER;
 			} else {
 				td->str = STR_LANDINFO_CANAL;
@@ -725,8 +725,10 @@
 		{{ 0, -1}, {0, 0}, {1, 0}, { 0, -1}, { 1, -1}}
 	};
 
-	/* Ensure sea-level canals and buoys on canal borders do not flood */
-	if ((IsTileType(tile, MP_WATER) || IsBuoyTile(tile)) && !IsTileOwner(tile, OWNER_WATER)) return;
+	/* Ensure buoys on canal borders do not flood */
+	if (IsCanalBuoyTile(tile)) return;
+	/* Ensure only sea and coast floods, not canals or rivers */
+	if (IsTileType(tile, MP_WATER) && !(IsSea(tile) || IsCoast(tile))) return;
 
 	/* floods in all four diagonal directions with the exception of the edges */
 	if (IS_INT_INSIDE(TileX(tile), 1, MapSizeX() - 3 + 1) &&
Index: src/station_map.h
===================================================================
--- src/station_map.h	(revision 11274)
+++ src/station_map.h	(working copy)
@@ -154,7 +154,16 @@
 	return IsTileType(t, MP_STATION) && IsBuoy(t);
 }
 
+static inline bool IsCanalBuoyTile(TileIndex t)
+{
+	return IsBuoyTile(t) && !IsTileOwner(t, OWNER_WATER);
+}
 
+static inline bool IsSeaBuoyTile(TileIndex t)
+{
+	return IsBuoyTile(t) && IsTileOwner(t, OWNER_WATER);
+}
+
 static inline bool IsHangarTile(TileIndex t)
 {
 	return IsTileType(t, MP_STATION) && IsHangar(t);
Index: src/openttd.cpp
===================================================================
--- src/openttd.cpp	(revision 11274)
+++ src/openttd.cpp	(working copy)
@@ -1626,7 +1626,7 @@
 						if (GB(_m[t].m5, 3, 2) == 0) {
 							MakeClear(t, CLEAR_GRASS, 3);
 						} else {
-							MakeCanal(t, GetTileOwner(t));
+							MakeCanal(t, (GetTileOwner(t) == OWNER_WATER) ? OWNER_NONE : GetTileOwner(t));
 						}
 					}
 					SetBridgeMiddle(t, axis);
@@ -2160,6 +2160,18 @@
 		FOR_ALL_INDUSTRIES(i) i->founder = OWNER_NONE;
 	}
 
+	/* From version 82, old style canals (above sealevel (0), WATER owner) are no longer supported.
+	    Replace the owner for those by OWNER_NONE. */
+	if (CheckSavegameVersion(82)) {
+		for (TileIndex t = 0; t < map_size; t++) {
+			if (!IsTileType(t, MP_WATER)) continue;
+			if (GetWaterTileType(t) != WATER_TILE_CLEAR) continue;
+			if (GetTileOwner(t) != OWNER_WATER) continue;
+			if (TileHeight(t) == 0 ) continue;
+			SetTileOwner(t, OWNER_NONE);
+		}
+	}
+
 	/* Recalculate */
 	Group *g;
 	FOR_ALL_GROUPS(g) {