Lao Tzu provides a detailed explanation in chapter 8 of the Tao Te Ching. He speaks of seven specific and distinct ways that water can be connected with virtues:

1. Dwelling with the right location Water naturally flows to the lowest point in the immediate vicinity. This can be the metaphor for a humble person, because the arrogant person is quite the opposite in always seeking the highest, most visible spot. Thus, we can say that water embodies the Tao of humility. It is the natural kind of humility that never needs to be faked or forced — and exactly the kind that we need to cultivate in ourselves.

2. Feeling with great depth Truly virtuous people are like deep pools of water. Not everything about them is apparent at first glance. They possess such remarkable depth of character that it would take quite some time to really know them. They are like the sunken treasures deep beneath the waves. You may not realize it at first, but if you explore your friendship with them, you will discover the treasures for yourself. You may also come to the realization that you wish to cultivate the same depth in your own character.

3. Giving with great kindness As a river flows across the land, it nurtures all living things that it comes across. All the plants and animals benefit from the water of the river. Once it has done its work, water moves on without waiting for recognition or praise. Compare this to how people often give with strings attached, expecting some sort of approval, and we can see that water demonstrates a higher virtue — the virtue of unconditional kindness.

4. Speaking with great integrity Water reflects its surroundings with perfect fidelity when it is calm and undisturbed. In the same way, those who study the Tao have an obligation to reflect the truth with the same degree of accuracy. With peace and clarity in their thoughts, they speak plainly and truthfully. They exhibit an impeccable integrity that can be sensed by others, thus winning the trust and respect from everyone.

5. Governing with great administration Water administers to all equally. All benefit from water regardless of who they are, because water passes no judgment on anyone, and makes no selection based on some preconceived values. Can we learn from water in this regard? If so, we will naturally treat everyone we come across with the same level of basic courtesy — this is the universal administration of the Tao, as demonstrated by water.

6. Handling with great capability The great capability of water comes from great versatility. As it flows toward its destination, it handles all obstacles with the greatest of ease. It can flow to the left or the right, over or under, without slowing down or stopping. Also, water is not limited to its liquid form — it can also be steam or ice, thereby offering even more versatile flexibility in various applications.

7. Moving with great timing Water has a heavenly sense of timing that manifests differently, according to season. Thus, summer rain never falls in winter, and winter snow never falls in summer. When nature is in balance, water demonstrates that there is a time for everything, and everything can occur in its own time. When we emulate this, we become mindfully aware to take the appropriate action at just the right time.

Each of the above leverages mental images to make the teaching easier to remember and to practice. Together, they are known as the Seven Virtues of Water. They provide a blueprint for life, a set of practical guidelines we can apply everyday.

When we follow these guidelines, we learn to cultivate humility, depth of character, unconditional kindness, impeccable integrity, universal administration, versatile flexibility, and a sense of timing through mindful awareness.

source: http://taoism.net/tao/the-seven-virtues-of-water/