"Waterbend [cost]" means "Pay [cost]. For each generic mana in that cost, you may tap an untapped artifact or creature you control rather than pay that mana."

Even if the cost of the spell or ability that waterbend is part of increases or decreases, you still may only tap artifacts or creatures to pay for costs up to the amount of the generic mana in the waterbend cost.

Exhaust abilities can be activated any time you could normally activate an ability.

If a waterbend cost is part of the total cost to cast a spell or activate an ability, you may tap an untapped artifact or creature you control rather than pay one generic mana in that total cost any number of times up to a maximum of the amount of generic mana in the waterbend component of that total cost.

If an ability triggers whenever you activate an exhaust ability, that ability resolves before the exhaust ability resolves.

If an artifact or creature you control has a mana ability with {T} in the cost, activating that ability while casting a spell or activating an ability with waterbend will result in the artifact or creature being tapped before you pay the spell's costs. You won't be able to tap it again for waterbend. Similarly, if you sacrifice an artifact or creature to activate a mana ability to pay a cost with waterbend, that artifact or creature won't be on the battlefield when you pay the spell's costs, so you won't be able to tap it for waterbend.

If an exhaust ability of a permanent is activated, and then that permanent leaves the battlefield and returns to the battlefield, it becomes a new object so its exhaust ability can be activated again.

You can tap any untapped creature or artifact you control to pay a waterbend cost, even one you haven't controlled continuously since the beginning of your most recent turn.