greathow:
Thanks for the replies. My thought was that I could possibly use an interrupt to wake from 'deep sleep' using the LowPower library.
AFAIK for that to happen you need an external device that puts a HIGH voltage onto the Arduino interrupt pin. If the Arduino is asleep it can't monitor things.
Another option is to use the WatchDog timer to wake the Arduino at intervals and check the water state at (say) every 20th interval. You could probably arrange for it to be asleep for 90% of the time.
Have you seen Nick Gammon's low power tutorial?
...R